Talk to any insurer or healthcare provider and you'll see the range of options when it comes to employee health coverage. But which one is best for your organisation? HRM finds out
If you've dealt with choosing health insurance packages for your employees, then you'll be aware of just how many options there are, and factors to consider. Selecting a suitable coverage plan is by no means an easy decision. Most employers gravitate towards a one-size-fits-all approach but these are not always cost-effective over the long run.
While you may not have the time to sift through the fine print either, it is always advantageous to know what your organisation is paying for and how it is helping employees. Assessing your health coverage plan can actually lead you to realise that it is not as wide-reaching as you thought, and that a range of alternatives exist for you to consider.
But why consider those alternatives at all? If there have been no complaints about your current plan, isn't that a sign that employees' health coverage needs are satisfied? Not necessarily, say experts. They believe organisations may be overlooking the most suitable coverage options for their employees' risk levels and health needs. Taking the time to look through the alternatives goes a long way to having employees' healthcare needs fully covered, especially in turbulent times when stress levels are high and medical problems can be exacerbated by longer working hours and anxiety.
Tighter budgets can also push employers to revisit their coverage options. Rising costs of medical treatment and preventative care are threatening to employees' wellbeing, and it is the employer's responsibility to provide coverage which still maintains a relatively low level of out-of-pocket expenses for staff. Neglecting costs may be as damaging as neglecting an employee's medical symptoms - staff may defer health checkups out of fear of the personal cost to them.
What's out there
Before checking out the various health coverage options, an employer has to decide which route is most appropriate for the company's budget and medical needs. Some organisations are self-insured while others go on corporate programmes. Some pass the responsibility back to the employee - giving them a budget and letting them sort out their health care on their own.
The type of coverage preferred largely depends on the company's size. Companies with staff numbers at both large and small extremes tend to opt for self insurance, according to Sebastian Tan, Head of Group, TM Life Asia. Self insurance has appeal because companies don't have to look into a detailed employee benefits plan. Costs are self-managed from the company's own funds or even from petty cash if the employee falls ill.
Typically, employers at small start-ups take this option because they don't think it's worth it to send employees for health screenings and check-ups on their budget. "Unless they're stable, they don't want to buy an insurance plan," explains Tan. Larger companies have a justification as well. Their main argument is that they are big, and they have the personnel and other resources to manage their own health care budget.
But using such alternatives can be risky as well. There is always a chance of an employee falling ill and their expenses being too great for company funds to cover. Depending on the terms of your self-insured agreement, you might have to fork out a large portion of your healthcare budget. Careless budgeting is a trap that companies can easily fall into when they become complacent about their health care offerings. "Why take your chances when an insurance company can manage the risks for you?" Tan asks.
However, companies who are covered by an outside health care plan are also facing challenges. Currently, it is becoming difficult to manage health care costs because of medical inflation. When medical expenses go beyond the premium - as they tend to do - premiums go up. Tan says the answer is for companies to look into covering workers on a coinsurance basis. This solution still requires an assessment of costs and allocations. Employers should zone in on where the highest costs are coming from and what adjustments can be made to trim them.
A simple rearrangement of coverage levels for different types of health care institutions can make a significant difference to the bottom line. Stipulating that employees will receive a higher reimbursement percentage on their bills from government hospitals will deter them from visiting private hospitals, and save the company those fees.
Third party administration (TPA) is another option for companies that still want some autonomy in their healthcare coverage services. With this method, a company outsources the administrative work to an insurance company while paying employees' health allowances from their own pockets. TPA is appealing because the employer doesn't have to deal with the parameters of a set health care plan, but can rely on another experienced body to handle the risk analysis and assessments of payout amounts.
Make it easier on them
It's easy to think of insurance companies as the bad guys. They have an appearance of cashing in on the bad times and profiting from disaster. But Tan says the image is a false one and insurance companies work closely with their customers, not against them. "We're not in the business of squeezing money from employers."
A key challenge for insurance companies is striking a balance between what the company needs and what it is actually willing and able to pay for. An organisation should do a thorough evaluation of its employees' health care needs and consider the budget needed to meet these needs. Insurance providers can then add value to their health care package through bulk deals with providers.
To make it easier for the insurance company, Tan suggests companies make their expectations clear from the start. "If clinical expenses are a certain amount, what are you trying to achieve in a programme," he asks. Identifying the specific problem is also helpful. For example, if the problem is cost containment, then setting this as a priority will help direct the insurance company towards meeting your goals.