Benefits plans are notoriously opaque. If you have ever asked what a procedure or a visit with a specialist will cost ahead of that appointment, you probably spent several hours on the phone with your insurance company and may still not have reached a clear, definitive answer.

This is a problem in its own right, but that lack of transparency creates other problems that are often hidden from employers. One of the biggest of those problems is that middlemen in your plan, like your advisor or your broker, may be making extra profits based on how your plan is used.

Who profits when your employees get sick?

While benefits plans have a number of layers where an advisor or a broker can make extra money off of you, these are the most common scenarios we see:

• Pharmacy services
• Medical management
• Telemedicine
• Rebates

In some cases, advisors can make a bonus on a per prescription basis. That’s a dramatic conflict of interest if those incentives are not disclosed. And advisor or a broker are tasked with helping you pick and implement the best plan for your business. If there are incentives baked into a plan that could influence that judgment, you deserve to know.

Aligning Incentives in the Right Direction

The first step you should take is to learn where to look for hidden incentives. Our compensation guide is the easiest tool for this (reach out and we’ll send you a copy). 

With that guide, you can vet your current plan for incentives that may be good for your advisor but not good for your employees or your business.

Next, you should start to consider using incentives to your advantage. For example, advisors like us (and there are a growing number of this type of advisor), work under a model where we are incentivized to lower costs and increase the quality of care. In other words, our compensation is at its best when your plan is performing at its best. 

Your goal is to lower the costs of your plan without compromising care. And our incentives are based on achieving that goal.

That’s how it should work.

Thankfully, the fight for transparency in benefits is moving in a positive direction, but we aren’t there yet. I’m happy to talk you through the challenges in the meantime if you’d like to schedule a call.

My colleague, Ben Conner, recently celebrated the birth of a new baby girl. She was born 8-weeks premature and spent 66 days in the NICU (Neonatal Intensive Care Unit). Today, she is perfectly healthy, but the experience Ben had with the insurance system is a powerful illustration of how a benefits plan can ease the challenge of a difficult family moment or ruin a family financially.

The Costs of a NICU Stay

While Ben and his wife were at the hospital with their new daughter, he constantly sang the praises of the doctors, nurses, and staff who cared for his daughter and helped his family cope with the stress of a premature birth. By all accounts, they were incredible, and I still hear him singing his praises on calls and in meetings.

They left that strong of an impression.

The costs of the care, however, are a different part of the story. Here’s how the costs broke down for Ben:

• $320,000 bill sent to Anthem, from the hospital facility
• $30,000 bill sent to Anthem for physician charges

To be clear, of the $320,000 charged to Anthem on Ben’s behalf, only $30,000 of that went to the actual professionals providing care. Yes, other factors for costs were involved. Ben’s daughter needed an oxygen monitor, a heart rate monitor, and she also needed regular feedings of Neosure, a supplement that helps babies grow.

You might be familiar with Neosure. It’s on the shelves at Walmart. $32 for 23 ounces.

Beyond that, Ben’s daughter needed very little additional care. Fortunately, she faced no major complications, and most of her NICU stay was precautionary. She was not being rushed into emergency procedures or taking expensive medications. She ate. She slept. She grew. She went home.

So Ben has taken to saying that after spending he was charged $320,000 for a fancy bassinet.

What These Costs Mean for Teachers and School Staff

Since we work in the industry, we carefully structure our plans to protect ourselves and our staff. Once Ben reached his family deductible, the health plan covered the difference, so Ben’s financial impact was relatively small.

That story would be very different, however, if Ben had an out of pocket maximum, which is common for the average American family.

If one of your teachers or staff members got a bill like Ben’s, could they afford it or would it be devastating to their family? For most workers, the answer is that this kind of life event has lasting financial consequences.

Here’s why:

In Indiana, private insurance companies markup costs 332% over Medicare. In our industry, Medicare is a metric for baseline costs because Medicare, as a federal program, is closer to actual costs of care as submitted by health care facilities.

In some cases, according to a presenter at our recent conference, that markup is 350% under private insurance. That’s a huge margin that comes at the expense of an employee.

Taking Back Control of Healthcare Expenses

There are better ways to do this. You can provide your employees with the coverage they deserve while also keeping the business financially stable. In many cases, you can actually pay less, but you have to be willing to pursue more innovative approaches to your benefits plans.

Large businesses are already using these tools, but private schools can too. Book a meeting with me to learn your options.