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Rethink employee benefits in the wake of COVID-19

Hit reset on health and group benefits: Employer priorities

Health and Benefits|Total Rewards
COVID 19 Coronavirus

By Alan Silver | June 24, 2020

As we emerge from COVID-19, employers have an opportunity to broaden their view of employee benefits and take targeted actions.

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About our Hit Reset on Health and Group Benefits series

This series covers opportunities for employers to evolve their employee benefits strategies as we emerge from the COVID-19 crisis. Our experts provide recommendations on actions employers can take as they re-evaluate benefits priorities, financing and employee needs.

As the COVID-19 curve has flattened and employees begin returning to the workplace, a new challenge awaits for employers: How to push forward with employee benefits plans, financing, administration and communication. 

Given the changes in employer workforces – ranging from work-from-home arrangements to furloughs, and reductions in force to increased populations – employers nationwide are trying to determine when to return to more normal operations. Looking forward to what happens when the dust settles, employers should take a step back and view this as a unique opportunity.

In times like these, communication to employees can be direct, factual, targeted and actionable. If done correctly, you also have the opportunity to be inspiring.

Employees are open to listening, understand the challenges you face and are waiting to see how you will respond and handle benefits. With that in mind, as you look to the future, there are targeted actions and decisions you can make that will better position you to implement your program.

Rethinking benefits priorities in the wake of COVID-19

Alan Silver shares three key employer priorities.

Review your population

Coming out of this pandemic, employers need to understand who their employees are, who their potential plan participants are, where they’re located, how old they are and how many dependents they have. You should also consider how many cohorts of employees you have: full timers, part timers, seasonal, contract – all of these will dictate what your new strategy should be and give you a better sense of your options. 

With regard to your employees’ locations, a map of the U.S. showing key concentrations is one of the most important things to have as you think about your policy. This will lead you to targeted questions:

  • Which carriers are offering what benefits?
  • What does the group insurance landscape look like?
  • What might be similar or different in the individual marketplace?

To make informed decisions, you’ll need to understand key locations and the risk profiles of your populations in these locations. This step is crucial to every step that follows. An employer that doesn’t understand its population and the profile of carriers where they reside is sure to miss something down the line.

Fundamental question: Group or individual?

Last year, the U.S. government released a new rule and corresponding regulations that fundamentally changed the way employers can and should think about medical benefits. The creation of the Individual Coverage Healthcare Reimbursement Arrangement (ICHRA) allows employers to choose whether they want to affirm the value of sponsoring group coverage or provide money in the form of an account for participants to purchase coverage on the individual market. This is one of the reasons why your U.S. map is important. The individual market for employer populations is robust and ready in some parts but not all of the country.

Once you understand your population, the carriers and what the individual market looks like, you can make this decision by class of employees (as defined in IRS regulations). That means for key population cohorts, you should be asking that fundamental question class by class. The answer might be different for different groups around the country, but you would be remiss if you didn’t explore the opportunity to redefine your commitment to employees based on workforce needs and the cost structure that you will be able to sustain.

For some employers, that may mean a full replacement ICHRA approach. For others, that may mean carving up their population between ICHRA and group coverage. In the near term, most employers will have the opportunity to perform the analysis and document their affirmation to retain group coverage for all employees.

I’ve affirmed the value of my group program for at least some classes, what now?

Employers that choose to retain group coverage should remember that decision comes with retaining risk.

To manage that risk, focus on three key areas:

  1. The paycheck/wallet/provider trade-off: In an ideal world, participants would have a rich plan, the broadest network available and a low payroll deduction. First things first: Employers need to understand that in this environment, two of the three of those may be possible, but not all three. Then, they need to communicate this trade-off to participants.

    Maybe you want to provide a rich plan but add a differentiated network in order to get a low payroll deduction. Some employers may want to provide leaner benefits with broader networks to keep payroll deductions down. Others will want rich benefits with broad networks, but have their employees feel the impact of that in their paychecks. Employers that modernize benefits may use technology to have some combination of all of the above, with employees making their own decisions.

    Employers need to own and communicate what they do to manage the trade-offs required between paycheck, wallet and provider, and they need to be intentional about it. As we’ve said, we have an opportunity. Consider replacing the traditional “tweak” of a copay or deductible with a statement on the value of a payroll dollar, money in participants’ wallets and the providers they see for care.

  2. Measurement strategy: At this point employers have gained an understanding of their populations, made a definitive choice around group versus individual coverage and managed the paycheck/wallet/provider trade-off to arrive at a medical/prescription program design. Now they need to take the steps necessary to manage the program, which starts with a measurement strategy.

    Employers tend to be on one of two ends of the spectrum of measurement – too little, relying on aggregate claims information to make decisions, or too much, gathering every metric in a report that approaches 50 pages in length.

    A true measurement strategy will focus on what is actionable: Which metrics will lead me to take an action? What are the conditions that my population faces that I can manage through an action? Which behaviors do I see that can be easily changed to a more efficient approach? Which dashboard do I need to be able to monitor these aspects of my population and the impact of the program changes I make over time?

  3. Target your actions: The last aspect of the process builds on everything that came before. If you understand your population, you can target actions to meet their needs. If a certain condition is not an issue in your program, you can set that expensive disease management program aside in favor of something actionable. If your data shows a gap in care for one population in a specific location, you can target a program for that group.
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Rethinking your benefits strategy

Now is the time to establish priorities in point solutions, care management approaches, prescription management and direct relationships with carriers and provider groups. Some of these interventions will help employers now. Some will require time and a better understanding of the risk profile and design structure of the population to be successful.

Employers need to focus on what helps meet our needs immediately and work to improve the employee experience to deliver on the promises of inspiration and collaboration.

Fortunately, or unfortunately, if you choose to retain group coverage, your responsibility doesn’t stop there. Retaining group coverage is no longer what you should or have to do – it’s a choice you’ve made. If this is your choice, embrace it. Continue the cycle of trade-off, measurement and action. Be intentional. Every action you take should have a reasonable and expected outcome, which will help you understand how effectively you’re managing your program risk.

The COVID-19 pandemic has changed the way we view our workforce and employer priorities for years to come. In the aftermath of the pandemic, employers should seize the opportunity to create the program they wish to build for the workforce they need to attract and retain. Committing to a focused approach to benefits, high-performing employers can help fulfill the promises of a rebounding economy.

Author

Senior Director and Lead Actuary, Brokerage and Advisory, Health and Benefits, North America

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