About the Author
John Staub is a licensed and published expert on innovative group health benefits solutions. He serves as a national thought leader and speaker on budget strategies that improve care for employees, while improving fiscal control for employers. Along with the team at Remodel Health in Indianapolis, they have helped organizations save over $24 million back into their mission. John also specializes in change-leadership and empowering leaders to make the most of every new opportunity to make as much of an impact as possible.
According to recent industry analysis, higher education at large is struggling financially, and these struggles predate the challenging circumstances presented by the pandemic. Raising tuition can solve the problem only to a certain extent. College Board reports the cost for tuition at private higher education institutions has gone up 20% in the past five years and 54% in the past 10 years.
Now amidst the COVID-19 crisis, the need for better budgeting solutions has never been more apparent. Forbes suggests the negative impact is upwards of $120 billion lost for higher education. And due to lower healthcare usage in 2020, we should expect to see dramatic increases in 2021, resulting in subsequent increases in health benefit costs. This poses a problem not only for the upcoming year, but future fiscal years as well.
On top of the need to maintain budget control, there’s a more important topic at hand — the mental wellness of both students and staff at any organization. The latest research from the CDC reported that 41% of individuals struggle with their mental health, yet with already limited resources, the ability to provide any additional assistance in this area is also restricted.
However, solutions are happening in higher education that make positive impacts on budgets and improve the ability to increase care for faculty and students. An example of this is Grace College of Winona Lake, Indiana that has seen savings of over $2 million, and can now offer mental health benefits to its people. Thankfully, while certainly innovative, it’s not alone in these results.
The following highlights some useful strategies to identify more funds for student wellness in your institution.
1. HSAs over Copays
Too often, a health insurance plan is judged by its copay. And while that can be an important factor in certain cases, it shouldn’t be for the majority of Americans. Statistics show that on average, people in the U.S. only visit the doctor two to three times a year. (This number counts their annual checkups, which most people don’t know is actually included for free under preventative coverage.)
Now, we are talking about an average of two visits per year, just to maintain that $20 copay? Sure, you’re thinking, But wouldn’t it cost “way more” if you didn’t have those copays? Let’s take a look at some more of the facts. First, it’s important to know that even if you have to pay a full bill for the doctor visit, you’re only taking about $50 to $300 at most (and even cheaper when you cash pay). Second, a gold copay plan is on average $10,000 more expensive than a High Deductible Health Plan (HDHP) that qualifies for a Health Savings Account (HSA). This means that you could actually save money, and lower your own risk by using HSAs.
After all, remember the academic definition of insurance is “the transfer of risk” and not “how much it costs me for medical maintenance.” This means that the most important number you need to look at is the out-of-pocket limit. Believe it or not, the out-of-pocket limit on HDHPs is nearly always lower than copay plans. This means not only are you spending more, but you are also risking more by not rethinking and better investing your health benefits dollars.
That being said, there are times when copay plans can be more advantageous to a unique circumstance. However, based on the real data of the vast majority, ditching the copays at large can have significant benefits.
2. Improved HRA Design
If there are new savings to be found, that means there are new methods to improve the quality of coverages. Health Reimbursement Arrangements (HRAs) are the best way to make this happen. They can be bolted onto a core plan to lower total expenses and exposure to the employee.
HRAs can be used in several ways. Their design is key in order to not fully expose an organization to additional guaranteed costs. (For example, if the HRA is structured at the front end to reimburse 100% of expenses right out of the gate.) However, when paired with HSA dollars on the front end, the middle portion then being the net-exposure to the employee, and then bolt on a backend HRA, you have tremendously improved both your monthly expenses and also the total employee risk.
Additionally, because it represents a partial self-funded element of the insurance plan, the regulations of what may be considered reimbursable are actually quite flexible as long as the HRA rules are maintained as equitable across the entire organization. Self-funded elements of insurance have been protected by the U.S. Supreme Court, which makes them quite attractive as the means by which to better project costs and protect your team.
3. Better Manage the Employer Mandate
If you know, you know about being an Applicable Large Employer (ALE). And with it comes many assumptions, primarily that an ALE is required to provide a health plan to its team. This is not entirely true. The ALE mandate does require the employer to participate in its employees’ healthcare, but it does not require employers to provide a plan. There are actually three ways to fulfill the mandate, and determining which way is another key component to better stewarding the resources of the organization.
The first option to fulfill the ALE mandate is to sponsor an actual health plan for the team. But not just any plan — it is classified as a Minimum Value Plan (MVP), which for the average person can be understood as just the normal plans you see offered. The second option to fulfill the ALE mandate is to actually do nothing, and the IRS will send you a bill called the Shared Responsibility Payment, part A. No, it is not a penalty. The IRS certainly has plenty of penalties, but this code is not written as such. It is as simple as it sounds: a payment for the IRS to take care of your team on the Individual Marketplace. (You actually get the first 30 full-time employees for free, too.)
Thirdly, and similar to option two, is to provide a Minimum Essential Coverage (MEC) plan and only receive a Shared Responsibility Payment for those employees who used tax credits on the Individual Marketplace. Granted, calculating between these three options can be extremely difficult, as the complexity of data to analyze is profound. Thankfully, software is available to help evaluate this number and provide transparency to which option can save you the most.
4. Personalized Plans
The one-size-fits-all approach to healthcare is simply not true. Healthcare is personal, and health plans should be personalized to reflect each individual situation. Consider 403(b) investments that can be diversified uniquely to match the needs and desires of the investor. Similarly, health benefits can be individualized to reflect the unique situation of the individual. By using diversification and actually investing health benefits investment dollars rather than expensing, you can better steward resources, while also better serving people.
When moving into a managed individual structure rather than a traditional group, you unlock many different benefits for the employee to find something tailored to his or her own circumstances. For example, many of your employees are not allowed to join their spouses’ plans even if they want to because you’re offering that traditional group health plan.
What if by personalizing plans, you keep those families together on just one deductible? That would sure make them safer. What if you have employees who would really prefer a sharing ministry, but they can’t use your tax-free dollars toward the monthly cost? Personalized plans can leverage all of that, too. These represent just two of many instances where costs go down by caring for employees personally.
Leveraging technology improves effectiveness and efficiency. We trust technology solutions in nearly every area of our life. Telehealth is merely the latest advantage provided to us as consumers. The impacts of the COVID-19 pandemic certainly helped to accelerate its acceptance even further. And with greater acceptance brings greater access.
As of today, approximately 75% of standard medical needs can utilize telehealth services. But not only is the scope of care important, the speed is equally — if not even more — important. Faster care is almost always better care. Why wait a few hours to get into your primary care, or the local urgent care? Telehealth visits are nearly always cheaper, if not provided for free with many plans or programs.
Speed is especially important when it comes to mental health. Getting connected within minutes or hours is much better than days or weeks. When an individual is actively struggling with his or her mental health, he or she often needs to talk with someone right away, in that moment. Students especially need to have access to care in the midst of a crisis.
Maybe it’s an upcoming test, the worry of a future job, or even relational conflict (since everyone else around them is stressed, too). TimelyMD is the national leader in student telehealth and is passionate about ensuring students don’t have to wait for the next available midday slot to talk with a local therapist. Instead, TimelyMD gives students the opportunity to access care right in the middle of their most difficult times and connect with someone who will listen.
Improved student care and wellness may start with a good plan and good intentions, but that plan will never be accomplished without having sufficient resources to actually enact it. The above methods are the tools used by the industry experts and thought leaders at Remodel Health to regain and repurpose more resources back toward the mission of higher education.
Over the past four years, Remodel Health has helped organizations save $24 million dollars on their health benefits without cutting quality, while taking great care of their teams. The latest data shows that leveraging innovation has saved its groups 216% as customers. What would saving 34% on your healthcare spend mean for your mission this next school year? Maybe this is the answer you’ve been looking for to find the resources needed to provide TimelyMD to your students, and make a positive impact on student wellness.
Connect with the Remodel Health team of consultants to evaluate the full spectrum of your options and start to rethink employee health benefits to get more money back into your mission.
About Remodel Health
Remodel Health is a health benefits software and consulting company that helps organizations better steward and strategize their medical dollars to cut costs as wherever possible, while taking care of people even better than ever.