Are Your Employees Parked in a Group Health Plan Wasteland?
Next time you pull up to your office, take a look at the cars your employees have parked in the ramp or lot. Unless you’re an automaker or taxi company, you’ll see a diverse set of cars selected by a diverse set of employees. The 20-something entry-level employee who barely makes it in a not-so-gently used compact. The executive in her luxury sedan. The hockey mom or dad in a full sized SUV. The CTO who shows up slightly sweaty on his bike. The 30-something who just bought her brand new dream truck.
Each mode of transportation – and the employees that operate them – has a story, purpose and fit. When you look at your health insurance benefits, what do you see? If you’re like many employers, you provide a group plan that you believe balances costs (between the business and the employee) and plan breadth. You may also provide a small number of core plan options and voluntary benefits to help your employees find a bundle that fits.
When you select a group plan, however, what you’re really doing is playing to the average.
What we’ve seen in helping employers move away from group plans and using Gravie to help employees buy on the individual market is that choice is important and sometimes surprising. A lot of attention is given to the cost of healthcare and insurance, for good reason. But for many employees that use Gravie, lower cost plans aren’t always their choice. In fact, when given a broader set of choices, 50% choose a “richer” more expensive plan compared to what they previously had in the group world. For them, the coverage upgrade fits themselves and their family better. On the flip side, 17% choose a less expensive plan because, again, it fits them. Just like what they choose to drive or ride.
“When given a choice, 50% employees choose a more expensive plan, while 17% choose a less expensive plan.”
What happens in the group health plan model in terms of fit? You end up with waste. In building a health benefits plan that makes the best attempt to fit all employees, you inevitably fit many imperfectly. Employees who would otherwise choose a used compact car get the Honda Accord, while those that really need a minivan get that same Honda Accord. One employee overpays, the other is left at higher risk or has higher out of pocket costs.
Studies have shown that up to 90% of employers will do away with their group employee health plans by 2020. Take a look at the parking lot and you’ll see one reason why.
To learn more about how switching to the individual market for health insurance will benefit you and your employees, download your free copy of our eBook. Just click the button below!
