Let’s face it, health insurance is confusing and expensive. We know medical debt is the #1 cause of bankruptcy in the U.S. – and most medical debt bankruptcies are filed by individuals who actually did have insurance. This striking data point helps illustrate the problem with rising healthcare costs, which is not sustainable for anyone’s pocketbook or their healthcare needs. In Indiana alone, the average annual family deductible rose from $2,500 to over $4,000 since 2014.
During open enrollment, consumers are often forced to pick the best of a myriad of bad options for their healthcare coverage, which can come with a ridiculously high price tag. This lose-lose situation is often linked to their employer offering a traditional group plan where all employees within a company are put on the same health insurance plan, which can drive up costs for both the employer and the employee.
A traditional group plan is a model many are accustomed to signing up for during open enrollment or whenever they change jobs. This model allows employees to pay into the same plan that everyone else is on and participate in it, which seems simple, right? The catch is that group health plan costs have dramatically increased over the past 20 years. Additionally, deductibles, in some cases, have doubled. Simply put, this is a ton of money consumers are paying out-of-pocket before their insurance company will start covering your medical expenses.
One size doesn’t fit all.
The good news is that there is a mutually beneficial option for employees and their employers to help relieve some of this financial burden. It’s called the “managed individual” plan. Just like many employers shifted from pensions because of high costs and began offering 401ks in the 1980s, they are now doing the same with managed individual plans, because the employer is giving the money to the employee, and they are deciding how to spend it.
This move from a traditional group plan to an individual plan is known to generate massive savings. On average, consumers will pay half of what they would’ve paid for traditional group benefits. For some Indiana employers, this understated move is saving them up to 50% in benefits costs through these customized individual plans. Because one size doesn’t fit all, this new option also empowers the consumer to take control of their healthcare costs and choose a plan that is best fit to meet their needs.
Reinvesting in your workforce.
From small employers to large enterprises, incredible amounts of cost savings are being found around the country when benefit offerings are reviewed, improved and updated for an organizations’ needs. A local Indiana college moved from a group health benefits plan to individualized plans, and with it they saw a significant decline in premium costs – saving the college more money than before. This allowed their hardworking staff to receive the raises they deserved with the money the college saved that year. Businesses who take advantage of better health benefits can unlock a vast amount of savings for both the employer and the employee – all while improving the company’s competitive advantage by caring better for their workforce in the long run.
This transition away from traditional group plans to a more individualized solution comes as our nation grapples with The Great Resignation. Even during the pre-pandemic times, data showed six out of 10 employees considered health benefits the most important decision-maker when choosing whether to stay at their current job or search for a new one. Because so many employers are pressured to attract employees amid a nationwide worker shortage, helping them find coverage that works best for them and their budgets have never been more important.
Managed individual plans are not “bad plans.”
Over the past few years, the average monthly cost for employees on individual plans has trended downward while those on traditional group plans have continued to rise. Because these plans are cheaper, many mistakenly perceive that these plans are not adequate.
In fact, I would argue that consumers are getting a better health coverage plan at a much lower cost. That’s because an employee is able to examine their options and pick out a customized plan that fits their medical needs. This immediately makes the consumer the decision maker when it comes to their coverage and ultimately how they use it when seeking out care.
It’s no secret healthcare costs are rising, but what many Hoosiers don’t realize is there’s a way for both employers and employees to drive down this line item without sacrificing quality. Through managed individual plans, consumers are empowered to take control of their medical needs without breaking the bank. Health insurance is a necessary expense, but it shouldn’t financially bleed Indy companies and their employees dry.
John Staub serves as Brand Development Manager for Remodel Health, an HR service used by universities and colleges across the country that provides innovative health benefits solutions to employers and employees alike.