Don’t Give Up on Limited Benefit Medical Plans!
Jun 10, 2010
If you think all limited benefit medical plans are going away, think again.
Employers across the country are evaluating their healthcare plans in light of the new Patient Protection and Affordable Care Act (PPACA), as amended by the Health Care Education Affordability Reconciliation Act of 2010. Fixed indemnity-type limited benefit medical products continue to be an option for employers seeking a less expensive, though less comprehensive, way to provide medical benefits to employees and their dependents.
Because fixed indemnity plans are exempt from the benefit mandates applicable to group health plans, they can continue to provide calendar-year and lifetime maximums. That’s not true for expense-based or so-called “mini-med”-type limited benefit medical products, the viability of which is in question as a result of the PPACA’s ban on coverage caps for group health plans beginning in September 2010.
And fixed indemnity plans fit a unique niche in today’s changing market. They pay a preselected, fixed-dollar amount for routine and preventive services such as doctor’s office visits, X-rays, prescriptions and emergency room visits. While not a replacement for major medical insurance, they are particularly suited to companies with part-time, seasonal, temporary workers or other employees where major medical plans are impractical or financially out of reach; or to companies looking to supplement their existing major medical plans to reduce the effect of high deductibles for their employees.
Flexibility is a key selling point for fixed indemnity plans as they can be used to provide stand-alone coverage or as a supplement to major medical plans. As the market evolves with the implementation of the PPACA, fixed indemnity plans can help employers bridge the gap as they work through their options and obligations under the new healthcare law.
Here are the Top 10 factors that benefit consultants and employers should weigh when considering a fixed indemnity limited benefit medical plan:
Look for a plan that can be customized — scaled up or down, depending on budget constraints, market conditions and employee needs. Fixed indemnity plans can be built around the types of medical services covered or a specific price point, so do your homework and find one that meets the specific needs of the company and offers employees choice and control. And watch out for plans with required design components, adding cost and taking control out of the employer’s hands.
2. Easy enrollment options
To maximize employee access to the plan, seek a carrier that offers a variety of enrollment options —online format, in-person call center, integrated voice response call center or paper enrollment. Employers then can choose the option or options that make the most sense for their employees. Plan-specific enrollment materials, such as booklets or brochures, also are helpful in educating employees about eligibility requirements, what’s covered and what’s not.
3. Fast claims processing
Fast, fair claims processing is essential to the success of any medical plan. The relatively simple design of a fixed indemnity plan makes this possible. Carriers should be able to pay claims within seven days, barring unusual circumstances.
4. Prompt customer service
Customer service is especially important in any limited benefit medical plan as employees need to know exactly what and how much is covered before they go to a doctor. Look for a carrier with a good reputation for quickly responding to customer inquiries. When it comes to making the sale or renewing an existing client, service quality often tips the scales.
5. Rate stability
Seek out a plan that offers a fixed rate for all participating employees – not one with rates based on employee demographics or geographic location. Also desirable are plans offering a choice of a composite rate covering employees and dependents, or tiered pricing. With composite rates, the premium stays the same whether the coverage is for an individual or an employee with dependents. A tiered option, on the other hand, separates premium for individuals and families. With a tiered structure, companies can better tailor benefits to the unique characteristics of their workforce and design a benefits package around what employees value most.
6. No preexisting condition limitations or medical underwriting
Employees shouldn’t be denied coverage based on current medical issues. Find a plan without preexisting condition limitations or medical underwriting. Employees still may be covered even if they are receiving continuing treatment.
7. No required networks or out of network penalties
Fixed indemnity plans can be an excellent fit for seasonal, temporary or contract workers, such as truckers. Given the transient nature of this line of work, it is important that medical benefits be available to employees no matter where their work takes them. A plan without required networks allows employees to seek the services of any licensed medical provider for covered services wherever they are. Additionally, look for a plan that pays the same benefit regardless of a provider’s network status. This assures that employees are not penalized for seeing the provider of their choice.
8. No co-pays or deductibles
Fixed indemnity plans have no co-pays and deductibles. This feature can be used as a communication opportunity with employees who may be used to having co-pays and deductibles and who will appreciate the value inherent in the fixed indemnity plan when making the decision to seek medical attention.
9. No additional administration fees
This really boils down to who is administering the plan. If there is a third-party administrator handling premium billing or paying claims, odds are those costs are being passed on to the employer.
10. Hourly plan options
The ability to tie the cost of benefits directly to the number of hours worked by an employee is a powerful budget management tool for many companies. For example, if a plan costs $2 for each hour worked and an employee is scheduled to work 120 hours in a given month, the employer can plan to spend $240 on that employee’s healthcare costs. Hourly plan structures can be effective not only in managing medical costs, but in helping improve the accuracy of a company’s budget projections for monthly, quarterly or annual healthcare expenses.
In today’s evolving healthcare market, fixed indemnity plans are still a great way to offer a competitive employee benefits package when the cost of providing major medical insurance is prohibitive. The key is to find a plan that provides flexibility, rate stability and excellent customer service.
About the Author
Tim Adkisson is National Sales Vice President for Select Benefits Distribution in Symetra Life Insurance Company’s Group division. Adkisson directs the sales and distribution of Symetra’s fixed indemnity limited benefit medical product, Select Benefits, for the employer-sponsored benefits market. Adkisson joined the company in 1995 and has held numerous management positions within distribution since that time. A past president of the Society of Financial Services Professionals-Seattle Chapter, Adkisson also holds CLU, ChFC and LOMA Life Management Fellow industry designations. Symetra’s Select Benefits is a fixed indemnity group insurance policy designed to provide benefits to part-time, seasonal, temporary workers, or other employees who traditionally don’t qualify for their employers’ major medical plans.
Symetra recently launched a new ‘Shared Maximum’ design option for the Select Benefits product to give employees greater flexibility in accessing the medical benefits they use the most. The Shared Maximum option combines a pre-set group of benefits that share a combined calendar-year maximum ranging from $10,000 to $100,000. Like all Select Benefits policies, each benefit pays a preselected fixed-dollar amount for a covered event, and there are no preexisting condition limitations, no deductibles or co-pays, and no required networks. With a Shared Maximum option, an insured has the flexibility to use the fixed-dollar amount for any of the included benefits for covered events until the combined calendar-year maximum is reached. Select Benefits is not a replacement for major medical or any other comprehensive polity. It is designed to provide a preselected fixed dollar amount for benefits used on a routine basis. Select Benefits policies are insured by Symetra Life Insurance Company777 108th Ave NE, Suite 1200, Bellevue, WA 98004 and are not available in all U.S. states or any U.S. territories.
Coverage may be subject to exclusions, limitations, reductions and terminations of benefits. Policy form numbers in most states are LGC-8786 2/03, LGC-8787 2/03. Symetra Life Insurance Company is a subsidiary of Symetra Financial Corporation (NYSE: SYA), a diversified financial services company based in Bellevue, Wash. In business since 1957, Symetra provides employee benefits, annuities and life insurance through a national network of benefit consultants, financial institutions, and independent agents and advisors. For more information, visit www.symetra.com.