There are five factors to consider when considering the design of your employee benefit plan:
Size and funding ability
Plan designs like ASO and GroupHEALTH’s innovative Hybrid ASO are partly “self-funded”: your business will be responsible for paying for any eligible claim that occurs. This means that your business will need to have the financial resources to cover these claims, including unanticipated increases in claims volumes or large single claims. Of course, the benefit is that your pricing is entirely dependent upon your own business’ claims experience: you have direct control over your costs.
Complexity of coverage
You need to make sure that you’re providing your employees with the coverage they need – and that your business can afford. More complex plans can be more comprehensive, but often require increased plan administration and management, which may affect overall costs. Simple plans are less costly, but may not give your employees competitive coverage. Consider EVOLVE for a plan that grows with your business.
Some business’ have a long history of claims experience and a stable workforce, which allows them to understand their risks and anticipate costs. Other businesses may be new to group benefits, or have experienced swings in premium rates causing them to shy away from a self-funded plan or worry about catastrophic coverage. When choosing a plan design, you need to understand your business’ risk tolerance, and choose the right strategy for your business.
Sometimes plan design is as simple as understanding what you’ve experienced in the past. Predictable claims histories make self-funding more palatable. Ambiguous or volatile claims experience can make a pooled plan more predictable and help stabilize rates over the long term.
Employee demographics and agreements
Ultimately, your business needs the coverage that makes the most sense for your employees, and your bottom line. Understanding how your employees use their benefits, what they want or require, and your ability to afford the most competitive benefits is a question of balancing multiple factors. You’ll know you’ve chosen the right plan design when your employees feel confident in their coverage, and your business controls its costs.