Are you paying for something that plan members can get for free?

Feb 27, 2012

Few opportunities exist to invest in and enhance benefit programs.  The past decade has seen significant benefit cost inflation driven by drug costs and newer expensive drug therapies.   Although the historical double digit health inflation trend appears to have slowed slightly in the past two years, there remains little appetite to fund additional benefits as maintaining the current funding of status quo, still depletes available resources.

If plan sponsors can successfully lower long term inflation (currently 14%) on their Extended Health benefits by over half, they can literally free up hundreds of dollars per certificate over the long term.

The concept of off loading various claim costs (specifically drugs), and possibly catastrophic drug risk, has been increasing in popularity as sponsors gain insight and clarity around the opportunity of cost-shift back to government programs.  If sponsors achieve success in transferring this risk, making their benefits program second payer in many instances, there is potential for plan sponsors to invest these newly found funds in other areas of the benefits plan.

There are numerous examples of plan sponsors doing exactly that.  Some sponsors have figured out that reining in benefit costs in one area of the plan and removing duplication or redundancies in other areas, can free up money to reinvest in the benefits strategy for the company.  The net result: a more competitive benefit offering than the competition. When you are competing for talent and a more sustainable future for that benefit offering, that may just be the edge your business needs in today’s challenging economic climate.

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