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Medical premiums now quoted at the individual subscriber level - personalize premiums or average for category?

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?

Answers

Topic Expert
Doug Devlin
Title: Doug Devlin (CEO at Zuman) expert
Company: Zuman
(Doug Devlin (CEO at Zuman) expert, Zuman) |

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-tax deductions of premiums through a section 125 plan.

Let me know if you have any questions if you need more details.

Stephen Glenn
Title: Controller
Company: Pierre Frey, Inc.
(Controller, Pierre Frey, Inc.) |

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.

Liz Salisbury
Title: Controller
Company: Warp Corp
(Controller, Warp Corp) |

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 HR employee. I think its fairer to the employee to pay only the exact premium due.

Topic Expert
Malak Kazan
Title: VP, Special Projects
Company: ERI Economic Research Institute
(VP, Special Projects, ERI Economic Research Institute) |

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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