By Natalie Delmage



breakthrough ahead


Are your HR people fielding a lot of questions about plan design? 


Several of our clients are presenting different plans this year with rich benefits and different designs. 


Using a hypothetical illustration could help with any resulting confusion. 

When employees look at the Summary of Benefits, they are critically evaluating their out of pocket cost. Sometimes those simple numbers can wrongly give the impression that they are facing higher costs.


Let me give you an example:


$20 per pay check 
$30 per pay check
$3000 deductible
$1000 deductible


The increased per pay check contribution hits an emotional button for a lot of people because it affects their cash flow and is a guaranteed expense. By contrast, the lower deductible might not get an immediate reaction. People often think of the deductible as something they might pay but hopefully won’t have to. 


When the higher paycheck contribution creates resistance that the lower deductible does not overcome try presenting the same numbers in a simple hypothetical that compares year over year costs based on the two plans.


Look at how the numbers play out if you hit the deductible:
$20 x 26 pay periods + 3000 deductible = $3520
$30 x 26 pay periods + 1000 deductible = $1780


Suppose you are relatively healthy; you have a few office visits, some testing and several scripts. Under the new plan you hit the deductible in July and now have a lower coinsurance to pay for any future needs. Under the existing plan you still have $1740 before you meet the deductible.  Based on the illustration, which plan would you rather have?


There are of course other factors to consider such as copays, out of pocket max, pre or post tax dollars, coinsurance, etc… but we keep the example narrow because we are trying to illustrate one point: that a plan that may appear to cost more can actually have more value and save money at the end of the day.   


Do you think this kind of hypothetical can help your employees overcome resistance to new plan design? 


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