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Are Your Dependents Costing Your Plan?

The cost to offer benefits continues to rise and employers are challenged for ways to control those spikes.  Our go-to strategies are often cost shifting to the employee in the form of tweaking copays, altering pharmacy benefits, increasing the deducible and changing plan type (PPO versus CHDP).  While these  and other strategies such as health improvement programs and value based plan design are important when looking at the overall strategy, it is also critical to analyze who is on your plan and the financial impact of those members. 

According to the recent Mercer Annual Employer Survey:

-  Employers on average are contributing 51% for family coverage for standard PPO plans, and

-  On average 50% of employees are electing dependent coverage

Knowing these statistics is important when planning for new and future cost management strategies.  If you are considering alternative strategies to manage your dependents costs, here are some considerations:

  • Spousal exclusion 
    • This change in eligibility rules for spouses, only applies to spouses who are employed and are offered coverage by their employer.  If a spouse does not work, or works but is not offered coverage by their employer, they may remain eligible under your employee's plan.
  • Spousal surcharge
    • In this strategy, spouses are allowed to remain on the employer's plan, but in cases where other group coverage is offered and the spouse elects coverage, a surcharge is applied.
  • Contribution strategy
    • Consider your current contribution strategy, will a change in your employee/employer cost sharing ratio create a desired change?
  • Incentive to waive coverage
    • A soft approach to nudging spouses off your plan, some employers elect to offer a cash incentive to those employees whose spouse waives coverage. 
  • Dependent eligibility audit
    • Monitoring eligibility for health benefits is another critical strategy in managing the bottom line.  Additional benefits of an audit are increased employee accountability and improved plan compliance. 

It is important for employers to evaluate all strategies when looking to contain/control costs.  And when determining the right strategy, it is critical to work closely with benefits counsel to select the strategy that fit your goals and objectives and how best to implement. 

Posted May 03, 2013

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