Examining the role of paramedicals in employee benefits plans
Offering coverage for paramedical services can make your benefits plan attractive to employees. But, at the same time, paramedicals can crush your plan’s experience, saddling you with runaway expenses. How can you manage the need for a quality health benefits plan while also keeping the plan sustainable?
The first step is to understand the plan’s objectives. Those objectives can vary: some employers want a simple, cost-effective plan; others want a comprehensive suite of health prevention and maintenance alternatives. The demographics and turnover of the employee group will be valuable inputs when you determine your plan design.
For example, last year, one small Canadian company removed paramedicals from its plan. The employees decided it was a nice-to-have component instead of a must-have. Since they were the ones paying for the plan, in this case, it was a rational choice based on economics.
Traditional and Emerging Strategies
If eliminating paramedicals is unfeasible, sponsors can use other cost-cutting strategies after reviewing the plan’s benefits utilization patterns (i.e., how many members, spouses and children are using the benefits, and which kinds). The traditional strategy to limit financial exposure is to create per-visit and per-practitioner limits, but if a member and his or her family use all of the benefits to the maximum, the plan will still have a large expense burden. If you have four family members and $500 per practitioner, the plan could incur $2,000 on just one practitioner.
A more current approach is to have an overall family maximum, instead of per visit or per practitioner. This allows employees to determine what is most important to them and allocate their claims accordingly.
Another possibility is a hybrid approach. In this scenario, the DB component of the plan covers all catastrophic issues, such as drugs, hospital and accidental dental. Then the lifestyle and preventative components—such as nutrition, massage and naturopathy—are covered through a healthcare spending account.
The result is a plan that offers a very predictable experience and also gives members choice and peace of mind for serious health issues. Renewals are much easier because there are no surprises, and the member has the ability to allocate their benefit dollars to meet their particular needs.
Take the example of one company for which cost became a significant factor and the benefits plan had to be restructured. Hourly employees are now tiered based on tenure, with graduated co-pays. During their first year of service, they can utilize paramedicals— but since they are responsible for part of the payment, they will think more carefully about it. Once an employee has been with the company for a full year, he or she can move to the next tier of coverage. For senior leaders, the company put a more comprehensive plan in place, intended to remediate the toll of their extensive business travel. After three years with this approach, the company’s overall plan is working well, and it is expected to be sustainable into the future.
Today, many health benefits plans are saddled with cost and sustainability challenges. But a well-structured plan can accommodate paramedicals to meet members’ needs while also being easy on the plan sponsor’s budget.
Marla Schwartz is president of Benecaid Health Benefit Solutions Inc.
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