Under the new healthcare structure, small groups are quoted medical insurance premiums down to the subscriber unit, taking into the specifics of the covered parties: age, sex, and composition of family. In the past, employees were contributing towards a firmwide uniform premium for single, employee and partner, family coverage,etc. Now that quotations are specific to a particular employees situation, what are firms doing -- personalized costing or adopting an average? What's right?
Medical premiums now quoted at the individual subscriber level - personalize premiums or average for category?
Answers
Many employers use a "defined contribution" approach to fund their small group benefit plans given the new rate complexities. Employees are provided a "benefit allowance" to shop for available plans and supplemental benefits (life, disability, dental, vision etc) which allows the employer to budget the expense and still allows pre-
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Our employees contribute a fixed amount for their personal coverage. Those who purchase additional coverage for spouse and/or children pay the specific cost of the additional coverage.
We pay 75% of the employee premium. Our company has only 20 employees, so we are able to individualize the premiums. But it is a time-consuming process and prone to error. As we expand and add more employees, we will need to simplify this administrative process and/or add another
Some smaller companies pay100% for "employee only" coverage and have employee pick up the difference if they want to add family members. Otherwise 75/20 cost sharing seems common. Also look at your employee demographics and industry to see the threshold for the cost sharing where they no longer see it as a benefit. Objective is to offer a benefit they will use and be lever to attract/retain as well.
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Human Capital