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Benefits Are More Than Insurance

by City on a Hill
June 22, 2021

Insurance plans are a way to manage risk and protect from loss. Your benefits plan on the other hand is a potential tool for growth and gain. In other words, when we look at insurance as a transaction we are missing the opportunity to see our benefits plan as a strategy for improving our organization.

When deciding on a benefits plan, choosing the most expensive plan feels like the path of least resistance, because in theory a costly plan is more comprehensive. However, a standard plan is not developed with your people in mind, and in any other area of business, we would not consider the risk of implementing a procedure that is not designed for our organization. 

With the diverse nature in schools today one of the most important tasks in taking care of your employees is listening to them. 

The Problems with Some Benefits Plans

Flexibility and choice is key to providing a benefits plan that is focused on the health, wellness and future of your people. By listening to what your employees need, your benefits plan becomes more likely to be fully utilized which can introduce cost-saving capabilities leaving more money in the budget.

Quality of care will look different for different school boards. However, we find there are common areas of concern in many benefits. They are:  

  • Employees are almost always overpaying for prescription drugs. With greater control, you can source the exact same prescriptions for significantly lower rates in nearly all cases.
  • Plan perks may not match the needs of the population. Different types of workforces often benefit from different kinds of benefits, so a generic benefits plan often ends up having large chunks of programs that are underutilized.
  • Quality of care is not a priority in the current plan. Traditional benefits programs push patients to certain networks with no insight into the actual quality of the care they receive, which can mean more pain and suffering from employees as well as more downtime. With a more thorough approach, your people can see higher-rated professionals–often for a lower cost.
  • Communication and support are lacking. Navigating a benefits plan is typically a major frustration for employees, especially if they need to talk to an insurance company. This leads to a poor experience and underutilized benefits, but with a concierge or dedicated support person available, experience and care can actually improve.

Keep in mind, even a great benefits plan can fall short if you aren’t properly equipping your people to use it. 

Addressing the Delivery and Ongoing Benefits Education

Providing a written handbook, no matter how comprehensive and discussing the package in detail during the onboarding process (a time that is usually hectic for a new employee) is often not enough. Benefits training and ongoing support for all employees should be addressed often, for all staff, all year. 

The use of technology in the form of apps or an employee website can give employees the ability to view their benefits at all times. Some employers are even looking to utilize decision-support tools to support their employees, which can make the decision process faster and easier. 

Engaging team leaders, who are often the first to know about personal challenges an employee faces, is also a great way to support employees which can improve employee morale and overall culture of the school. Designating dedicated support people, within the school board or an expert in benefits for educational institutions can further support these tools for success.

Adapting Your Plan to the Needs of Your People 

Adapting your benefits plan to the changing needs of the population and growth of the organization can continue to improve employee recruitment and retention, while maximizing your cost-savings. What was a well utilized benefit last year, could become under utilized next year. For example, paid parking expenses for teachers may be less valuable in a world of online schooling.

Encouraging a happy and healthy workforce is a primary concern for most employers and perhaps most important in a school setting, where your employees have a direct impact on the next generation. A benefits plan based on what your employees need is not only protecting your school but creating an environment for nurturing education.

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The Right (and Wrong) Way to Cut Costs

by City on a Hill
May 19, 2021

Your benefits options are expanding each year as insurance providers introduce new offerings and as the healthcare exchange rolls out subsidies and plan alternatives. In this environment, your business has several potential choices, and chasing radical cost-cutting can be tempting.

For example, we have encountered organizations considering this path:

  • Outright cancel the organization’s benefits plan
  • Remove the internal mechanism for administering benefits (such as an HR lead)
  • Direct all employees to the exchange to pick their own plans
  • Leverage exchange subsidies and the staff reduction to lower costs

Would this mean lower costs for a school like yours? Yes, but that’s only part of the story.

Balancing Benefits Cost-Savings with Disruption

Costs are not always purely financial, and the rewards you unlock from something like a benefits plan are not always measurable in pure dollars nor does your benefits plan exist in isolation. It is interwoven into the whole of your organization.

You’re familiar with this concept already and likely apply it to other areas of your school. 

You could, for instance, save a significant amount of money by cutting or reducing your physical education program. Gymnasiums are expensive. Sports equipment is expensive. Children have the potential to get injured in any physical activity, making liability expensive. You have to have at least one phys. ed. teacher on staff or divert one teacher’s course-load to teach phsy. ed. 

If you gutted that program, you could save a lot of money, but the consequences would ripple through the rest of your work. Families considering your school might find your school less appealing because this offering is reduced or missing. Current students would get much less physical activity, which could not only affect their long-term health but also lead to potential disruptions as students get restless in class. Your staff might suffer also as teachers of other “non-essential” courses like music and art begin to worry that their jobs and their programs are next.

Yes, you saved on budget, but was the return really worth it?

The Big Return on a Benefits Plan

Most businesses, and schools are no different, find that their healthcare spend is their least controllable and most frustrating expense. You are right to want to find better solutions for this problem and to pursue alternatives to what you’re doing now, but be wary of losing sight of what an effective, in-house benefits plan does for your organization.

If you take the exchange-only approach or radically reduce your benefits coverage, you may encounter the following problems: 

  • With a benefits plan, employees can come to a central source to have questions answered and to use their coverage. If everyone is on the exchange, everyone has to fend for themselves.
  • Benefits plans naturally include an advocate for your people, which can be an internal HR representative or an advisor who is motivated to fight for your employees, making sure they are treated fairly and get access to the care they need.
  • The lack of uniformity can create tension. With every employee choosing their own plan–often based on their personal financial situation–you could breed tensions over who has procedures covered and who does not, even though they made those choices personally.
  • The employee experience can be painful and navigating the current system is difficult. One of the top considerations for job candidates is the benefits plan, so forcing everyone to the exchange removes that bargaining chip and also transfers more responsibility and frustration to the employees themselves. In addition, the messaging to employees, pointing them toward subsidies based on their compensation can be a very touchy one.  
  •   Relying on subsidies handcuffs compensation. If you increase wages based on merit, the hit from payroll taxes and the potential loss of a subsidy can mean that a raise has little material value and may even hurt the business and the employee financially.

Your benefits plan should be a strategic tool in your business. Managing costs is important, and you have more options for improving that than you may realize, but your benefits plan is also an employee retention tool, a recruiting tool, and a culture tool. If you do want to make big changes to your plan, do so carefully and with an experienced partner guiding you. Otherwise, your benefits plan might cost you far more than dollars.

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New Benefits Transparency Regulations for Christian Schools

by City on a Hill
May 19, 2021

Health insurance and employee benefits have been top-of-mind concerns for legislators, and those concerns are turning into a slew of new regulations and policies. While the intentions behind these rules and requirements are positive, they increase responsibilities and liabilities for employers of all types, Christian schools included.

The first major set of compliance requirements goes into effect Jan. 1, 2022.

New Benefits Transparency Requirements

The first element in this rollout is a set of new rules around pricing transparency in benefits. Employers must communicate their contracted benefits rates to employees, which means that your employees need increased access to the actual costs of the care they may receive under your plan.

The insurance network behind your benefits plan has all of this information and is the party setting and managing prices, but the responsibility for complying to this new rule is on the employer. You have to provide the right information to the right parties or risk being out of compliance.

If you are like most of our clients, your experience with getting answers from your insurance provider may be less than positive, making this particular obstacle significant for many organizations. Because of the complexity of your benefits plan and the potential scope of the information you need to gather and share with your people, complying with new transparency requirements should be a part of your rollout plan today.

If you wait until January, you are likely to encounter serious problems.

Planning Ahead for Painless Compliance

One of our team members has compared the torrent of new legislation to a tsunami. There is a lot coming, and you don’t want to get caught on the beach when it hits. If you plan ahead, you can put your school safely on the high-ground, entering 2022 with everything you need and all of the right processes in place.

In addition to the new transparency requirements, you should also prepare for the following:

  • Compensation disclosure requirements for vendors providing benefits services
  • New rules for surprise billing
  • Reporting requirements for new plan RX data
  • Mental health parity compliance
  • Section 125 plan relief
  • Exchange open enrollment and premium tax credit expansion
  • COBRA subsidies

We practice what we preach, so the same preparation we are encouraging you to take is a part of our process with clients. We recently hosted an in-house webinar for our clients to walk them through the upcoming changes and to answer questions about how they might be affected. You are welcome to view the webinar to catch up.

And, as always, you’re welcome to reach out to us directly to talk through your exact needs. All of this is entirely manageable and solvable if we work together and start early.

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The Hidden Middlemen Who Profit on Your Plan

by City on a Hill
April 13, 2021

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.

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The $320,000 Bassinet, The Story of a NICU Stay

by City on a Hill
April 13, 2021

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.

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