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Five Secrets to Reduce Benefits Cost, Part 5

Posted on April 27, 2010 | 1 comment


Author:
George Bashaw – Atlas Global Benefits

It is time to unlock the power of hidden benefits.  Each year when preparing to communicate new benefits changes, we tend to get bogged down in the delivery of rising medical costs and medical benefit changes. Understandably, medical hits the company’s bottom line and the employee’s wallet the hardest. This singular focus on medical benefits causes us to neglect the communication of other valuable benefits that may directly or indirectly save money for the company and your employees.  Prior posts in this series include Enrollment and Billing Audit, Dependent Eligibility Audit, Know Your Claims and Duplication of Coverage.

Secret Five:  Hidden Benefits
Hidden benefits are services and benefits that your employees may not fully understand or have no knowledge they exist.  They could be stand alone plans or riders on policies. Either way, they have a purpose and can be very useful.

They key is identify your hidden benefits and communicate them properly. Here is a list of  typical hidden benefits and some additional information about them:

  • International EAP
  • Preferred networks
  • Short term disability
  • Disease management
  • RX discounts
  • Medical evacuation and repatriation

The importance of an international EAP plan could merit several blog pieces on its own.  The obvious benefits of EAP are credit, substance, marital, emotional counseling, and the list continues.  Take anyone one of these common issues and multiply the stress of being a thousand miles from home and your support group and you have a serious problem.  A problem that needs to be addressed by someone who can support the cultural issues, language barriers, and the exponential stress associated of being abroad.  Not utilizing a good EAP plan can create loss of productivity and maybe the loss of your expat.

Some international medical plans come with EAP riders and other useful riders like medical evacuation and repatriation. You have to determine if the rider is adequate for your needs compared to a standalone plan.  Either way, it is important employees understand their benefits and how they can utilize them.

Communication
Make sure you take the time to communicate all your benefits each year and not just the changes. Ensure that everyone has a summary of the plan in an easy to follow handbook that can be accessed via the internet.  Additionally, you should issue new cards each year for wallets and purses.

My final recommendation on communication is bit outside the box but I have seen very positive results with my clients.  I recommend you consider inviting spouses to the meetings or at least include them in the communication.  In every home, you have a quarterback on issues like benefits and half the time it is the spouse.  Effectively communication with the spouse may pay off in the long run.

Good luck unlocking the power of your hidden benefits. I would love to hear your thoughts on this issue.

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Five Secrets to Reduce Benefits Cost, Part 4

Posted on April 13, 2010 | Comments Off on Five Secrets to Reduce Benefits Cost, Part 4


Author:
George Bashaw – Atlas Global Benefits

Need to find some savings without cutting something?  Pull out your bills and perform an enrollment audit.  This blog is part four in a series of simple ways to save money without altering your current benefit design or carrier. Prior posts in this series include Dependent Eligibility Audit, Know Your Claims and Duplication of Coverage.

Secret Four –  Enrollment and Billing Audit

I know it’s not very sexy but a sharp eye can find a few bucks with four simple steps.

Step One: Active Employees

Make sure only active employees are on the bill. When an employee leaves make sure they are immediately removed from your plan.  If they wish to continue coverage, make sure they are enrolled in COBRA (if applicable).

Step Two: Enrollment Errors

Verify that each person is enrolled in the plan they selected during enrollment and the carrier is billing you correctly.  Some plans have more than one medical choice and many plans have various levels of life insurance options where mistakes are easily made.

Step Three: Billing Errors

Once you have determined that everyone is enrolled correctly, make sure you are correctly being charged for every selection.  Despite all you hard efforts to renegotiate your insurance rates, you may find out the changes did not make it to the carrier’s billing system, or they were entered incorrectly.

Step Four: International Employees

You may be getting billed for employees who are not covered for thier specific region. It is important that you understand the contractual provisions of all your plans.  If you are covering local employees on an international plan, make sure the carrier is aware of their locations and they are included in the plan. I have seen many plans (EAP, long term disability, medical, life, and most importantly war risk) that have country specific coverage exclusions.

I hope you four-step your way into some savings.  Please share your thoughts.

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Five Secrets to Reduce Benefits Cost, Part 3

Posted on January 13, 2010 | 3 comments

Author:
George Bashaw – Atlas Global Benefits

I didn’t know you have kids.  Seriously, aren’t you single? I need to see some documentation.

Ok, that is a bit overboard. However, if you want to get serious about saving money on benefits, a dependent audit may be a bumpy but lucrative road.   This blog is the third in a series of five techniques to lowering your benefits cost without changing your plan design or carrier.  Prior posts in this series include Know Your Claims and Duplication of Coverage.

Secret Three:  Dependent Eligibility Audit
The intention of a dependent eligibility audit is to ferret out those who are ineligible for benefits.  Examples of ineligibles may include non-resident step children, college grads who may feel like dependents but technically are not, or the classic unemployed ex-husbands who will not get off the couch, but like an old hound, you feel sorry for them.  Joking aside, these people add up quickly. Finding one ineligible participant in your plan can save up to $6,000 per year.  Finding a slew of them will have a noticeable impact and go straight to the bottom line.

Communication is Key
Caution!  People get a pit in their stomach when they hear the word audit. Second, they do not like sharing personal information. Therefore, the way you deliver the message about the audit is key. In other words, you do not want to blast out an email today saying “proof of your dependent status is due by the close of business Friday.”

Sell the benefits of an audit to the participant.  The participants’ costs are going up and their benefits are getting cut, too.  Explain, as an employer and plan sponsor, you have a fiduciary responsibility to make sure all dependents are eligible, and to misrepresent is fraud.  Therefore, it is necessary to make sure the plans are in compliance.

Steps to Successful Audit

  1. Positive Communication
  2. Communicate at least a month before you start your audit to set expectations
  3. Create a plan and review with your employment attorney
  4. Communicate “the plan” (don’t call it an audit)
    • The definition of eligibility requirements
    • Methods to prove eligibility
    • Halo period where the participant may change status without penalty or embarrassment
    • Final deadline (here is where you may decide to define the nature of fraud)

Please share any stories you have about your experience with employee dependent audits.  If you happen to try one and you do not find any ineligibles, I may respond, “Look closer, the employees committing fraud may have left the building out of embarrassment.”

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Five Secrets to Reduce Benefits Cost, Part 2

Posted on December 18, 2009 | Comments Off on Five Secrets to Reduce Benefits Cost, Part 2

Author:
George Bashaw – Atlas Global Benefits

I developed five secrets to lowering your benefits cost without changing your plan design or carrier. Out of the five, I am confident at least one will help you. I posted the first one last week.  Here is number two:

Secret Two:  Duplication of Coverage
Every year, I find a new plan that has duplication of coverage, where a company is  paying for a benefit more than once.  This is most common in very large companies, and ones that that have experienced multiple mergers.

Case Study: Duplication of Coverage
Last year I discovered that a new client had three  Employee Assistance Plans (EAPs).  Of the three, they only knew about two of them, and communicated only one to the employees.  One EAP plan was a rider attached to a long term disability contract.  Another was a rider attached to the international expatriate medical coverage.  The third was a standalone EAP plan.

We decided to scrap the standalone plan and keep the two riders.  We felt the rider on the expat plan served the international employees needs far better than the other two plans.  Further, we decided to keep the rider on the LTD plan.  Even thought it was a rider, it was a good plan and it was less expensive than the standalone plan.

Financial Impact
Cleaning up the duplication of benefits in the scenario above took about two hours to analyze and saved my client about $50,000.  Even though the savings was insignificant in comparison their total benefits cost, we would not have reached our goal ($500,000 of total savings) without eliminating the duplication of coverage.

Scour Your Plan Designs
Have someone take the time to look at all your plans and see if you can find a duplication of coverage.  Who knows, you may be paying for something two or three times.

I would love to here where you have found duplication of coverage.

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Five Secrets to Reduce Benefit Cost, Part 1

Posted on December 3, 2009 | 1 comment

Author:
George Bashaw – Atlas Global Benefits

There are only a few ways to negotiate with an insurance carrier on fully insured plans.  For most carriers, claims history is the most important factor in determining pricing.  Therefore, you better know your claims if you wish to negotiate with its leverage.   Over the next few months, I am going to share five simple ideas to help you save money on your benefits.  Out of the five, I hope you find at least one of them useful.

Here’s the first one:  Know Your Claims!

Fully Insured and Self Insured
Insurance plans are fully insured or self insured. Most large companies have both. Typically, large multinational companies have self insured medical plans and fully insured non-medical plans.  Medium and smaller companies tend to have a majority of fully insured plans.  Therefore, it is likely that your company has at least a few fully insured plans.  Only fully insured plans will be discussed in this blog.

What’s Inside a Premium?
Premium can be broken down in two parts, claims and retention.  When an insurance company prices a new premium, they estimate future claims by looking at your claims history.  Estimated Claims + Retention = Premium.  Retention is approximately 20%-25% of the premium cost and consists of the following:  premium tax, overhead/administration, margin/profit, and commission/fees.

A Happy Insurance Carrier
Insurance carriers want claims to be around 75%-80% of premium.  If claims are over 80%, the carrier starts to lose money; if they are below 75%, they start raking in the profits. 

Claims Analysis:

Do a thorough analysis of your claims.  If your claims history is running less than 75%-80%, demand a decrease in premium.  If you do not get it, there is some reason why the carrier does not want to insure your risk.  For example, a carrier may not want to cover offshore drillers, so they jack up the price to reduce that demographic in their pool.

If you claims are over 80% you are getting a good deal. However, there are some carriers that may want your group and will offer you a better deal, even if you are running over 90% claims.

Please tell me your thoughts and share your experiences.  Know your claims!

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Medical Tourism: Saving Money on Global Benefits, Part 3

Posted on September 25, 2009 | 4 comments

George Bashaw

Author:
George Bashaw – Atlas Global Benefits

Medical tourism is a hot topic, but can it save money for your company?  And if the answer is yes, should you adapt your health plan to incent certain employees to go overseas for medical procedures because it is less expensive?  This is a complex issue and requires that you do your due diligence before deciding anything.  This blog on medical tourism is part 3 in a series to help companies save money on international benefits.

Medical Tourism
If you are unaware, medical tourism is exactly what it sounds like, people traveling abroad for medical procedures.  According to McKinsey and Company, the industry is expected to reach over $100 million by 2012.  With medical cost skyrocketing in developed countries like the US, people are traveling to places like India, Singapore, and Thailand for savings up to 90% on certain procedures. For example, a heart bypass in the US can cost around $150,000 compared to $15,000 in India, which includes air fare and a brief vacation. Therefore, self insured corporations with and without global operations are taking notice and beginning to investigate.

Multinational Companies
If you already have a multinational employee base with a true global benefits plan, medical tourism is a viable option for your employees covered under the existing plan.  Typically, under these plans your employees can seek medical attention from the provider network.  However, it is also typical to find the domicile country of your company to be excluded from these plans.

If you have a true global benefits plan, ask your broker or your carrier about the possibility of medical tourism within this population.

Self-Insured Plans
Perhaps the greatest potential savings can be realized by self-insured plans in developed countries like the US where medical cost are high.  Unfortunately, I am unaware of a clear solution you can implement.  However, large medical carriers like CIGNA will help you explore the opportunity.

I recommend performing a utilization study going back 3-5 years to determine the occurrences of planned medical procedures which are good candidates for large savings like heart bypass, hip replacement, or knee replacement.  Armed with this data, you can compare those costs with alternatives in other counties.  Then, create an incentive plan that may appeal to a segment of your employees.

Sounds great for the wallet but India for Heart Surgery?
The thought of traveling thousands of miles to a distant country, where you may be unfamiliar with the culture and customs, and sometimes even the language, may sound like a big step, and it is.  However, you may find the quality of care equal or better than you are receiving now.  I live in Tulsa, OK and going to Cleveland Clinic sounds appealing if faced with a medical procedure.  Did you know that the Cleveland Clinic has a joint venture with the UAE and a clinic in Dubai?  Did you know that the Harvard Medical School has a joint venture with Wockhardt in India?

In Summary
There are many additional aspects to explore with medical tourism: cost, quality of care, cultural, legal, liability, and more.  Unfortunately, it would take a novel to address them all and I cannot in a blog piece.  However, if you are serious about saving money the potential is there.  Just be sure you do your due diligence.  Please leave a comment to let me know your thoughts or experience with this topic.

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Expats: Saving Money on Global Benefits, Part 2

Posted on August 18, 2009 | 2 comments

George Bashaw

 

Author:
George Bashaw – Atlas Global Benefits

I hear snippets everyday about the economy recovering. Try telling that to your HR friends.  They are still getting pressure to cut costs and create efficiencies.  Adopting a true expat plan for benefits can create numerous efficiencies.  This blog is Part 2 in a series to help companies save money on international benefits by creating a global health benefits package specifically for expats.

Hard Cost
I am surprised every time I run into a company that does not have a global benefits package for expats.  A typical response is, “we don’t want to spend the money.”  This is a common misconception.

Did you know:

  • Expat plans are typically less expensive and more compressive than a comparable domestic plan;
  • The plans typically they do not have copays and many of the exclusions common with domestic plans;  and
  • The hard cost does not take into consideration the cost of a critical event like a heart attack or a medical evacuation and repatriation without international coverage.

Do a comparison and see where your company falls.

Efficiencies for HR
A company has three options when insuring expats:  keep them on a domestic plan and run claims through their current carrier; put them on a local (country-specific ) plan; or a specialized expat plan.  By choosing the latter, you can greatly reduce the administrative burden.  Here’s how:

  • Compliance:  Administering employee benefit plans in multiple countries creates a significant amount of compliance with local laws.  Adopting a global benefits package for globally mobile employees shifts the burden of compliance from the HR department to the insurance carrier.
  • Claims and Service:  This becomes the responsibility of the expat carrier.  It is only a matter of time before you have an employee in an assignment country on the operating table demanding payment to begin surgery.
  • Consistency in Benefits:  It is common for companies to provide expats with a local health care solution rather than one that is fully transportable around the globe.  Since benefits vary from country to country, you could end up with a disgruntled expat when they discover that one country’s benefits are richer than the next assignment.

Benefits for the Expat

  • Freedom:  Expats are on foreign assignment and their needs are significantly different than someone who is a local employee.  By nature, the expat will travel (different countries and home) and they need coverage that will follow them.
  • Productivity:  A global benefits package keeps your expat focused on their assignment.  They no longer worry about having to travel for medical care or deal with claims and medical provider issues.

Foreign Nationals
Creating a global benefits plan for non-US citizens working abroad requires some due diligence and proper communication.  The challenge is to design a plan that is integrated with any social benefits so there is no duplication. Perception of the new plan is very important.  In order to be well received, it is necessary to properly communicate the benefits to the expatriates so they are comfortable with the new private coverage as compared to their prior social system.

Use a Broker for a Complete RFP
I know this sounds self serving, but use a broker who writes international coverage.  Out of ten companies I call on, nine have one of two expat carriers. But there are more than a half a dozen carriers who provide quality coverage and it would serve you well to get a full RFP.  Second, a broker has knowledge of the market, leverage with carriers, and can match your needs with the appropriate insurance provider.  Third, most brokers have enough business to merit carrier discounts that can help negate commissions or broker fees.  In sum, make sure you are specifically insuring your risk and use a professional to facilitate the process.

I hope this helps you navigate through the complexities of expat health care options.  Please let me know your thoughts by leaving a comment.

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Update! Employer Mandated Health Coverage in Dubai

Posted on July 6, 2009 | 3 comments

George BashawAuthor:
George Bashaw – Atlas Global Benefits

In early May, I wrote a blog on the Dubai Health Authority’s (DHA) efforts to implement employer mandatory health insurance.  Since my blog, the Director-General of the DHA has put the funding scheme on hold until 2010.

Instead of paraphrasing a nice article in the Khaleej Times, you may find it here if you would like more information on the topic.

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Multinational Pooling: Saving Money on Global Benefits, Part 1

Posted on June 23, 2009 | 14 comments

George Bashaw

Author:
George Bashaw – Atlas Global Benefits

With pressure from the C-Suite, HR is walking a tightrope to reduce cost and provide equal or better benefits.  Multinational pooling is one option to consider for a company that has multiple international locations.  This blog is Part 1 in a series of suggestions to reduce cost without sacrificing the quality of benefits.

Multinational Pooling
Multinational pooling is a contract in which a corporation with two or more locations can spread insurance risk by joining a larger pool of insureds.  This contract is facilitated by a pooling network which has a network of providers in various countries. Pooling can be used to spread risk for a number of employee benefits including medical, life, and disability insurance.

Many pooling networks require a minimum of ten employees per country.  Therefore, pooling can be a great way for smaller companies to provide consistent benefits, reduce administration, and save money.

How Can Multinational Pooling Reduce Cost?
Since the pool consists of a large group, the risk is experience-rated instead of fully insured.  The nature of an experience-rated contract eliminates some of the administrative costs and margins of a fully insured plan.

Providing the experience is good (determined during due diligence), the premium may be less.  If the corporation decides to participate in a pool and the experience is favorable, a dividend payment is received at the end of the year.  If the experience is poor, it may be mitigated by stop loss insurance, or the balance will be carried forward and can be recovered by future dividends.

Additional Benefits of Multinational Pooling
Underwriting small groups is always challenging.  By pooling with a larger group, there are better guarantees, limits, and benefit offerings.  This allows smaller groups to meet a common objective: consistency in benefits. Additionally, the pooling arraignment will likely provide enhanced financial reporting, consistency in communications, lower acquisition costs, and reduce the burden on HR.

What Else?
Multinational pooling is not for everyone.  Due diligence with a few pooling networks can determine the pros and cons.  As this is a complex, technical area, it’s always best to work with a benefits professional with experience in this area.

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Employer Mandated Health Coverage in Dubai

Posted on May 7, 2009 | 2 comments

George Bashaw

Author:
George Bashaw – Atlas Global Benefits

On January 1st, the Dubai Health Authority (DHA) initiated the first phase of employer mandatory health insurance for expatriates and UAE nationals working in Dubai.  All expats new to Dubai must obtain a Health Benefit Contribution (HBC) compliant insurance policy.

Background

The population of Dubai has exploded from 300,000 to 1.5 million since the Department of Health and Medical Services (DoHMS) was created over thirty years ago.  Considering the growth and significant demographic changes in Dubai, the DoHMS has done an adequate job (World Health Organization ranks the UAE 44th).  Did I say something in “Dubai” is “adequate”?  The two words are mutually exclusive. In Dubai, they simply strive for the best.  Therefore, the DHA was established to accomplish this goal by 2015.  What does this mean for you?

Existing Plans

If you manage an existing health plan in Dubai, it is valid until it expires. Upon renewal during 2009, the new plan must be HBC compliant.  By January 1st 2010, all corporate health plans must be HBC complaint.

Payment and Administration

Who pays the HBC?  The employer pays the tab.  The HBC is a flat-rate for all employees, including UAE nationals and expatriates.  There is another hitch.  All HBC policies must be sold by authorized insurance companies. Since most employers will provide benefits above the notional standard, there is a group of authorized insurance companies waiting to sell you a top-up plan.

Choosing a Clinic

Not so fast.  All employees must choose a primary clinic to complete enrollment.  They can do so by visiting an OCP (Outpatient Care Practice)clinic in person, on the web www.dha.gov.ae, or through their employer.  Want the good news?  The employer may choose a default OCP clinic.

Employer Responsibilities

Just so there is no confusion on the rules, I copied this from the DHA website: 

  1. This is a mandatory system enforced by law – employers must comply
  2. Every employer pays a standard payment (HBC) to the DHA for every employee once a new HBC policy is introduced
  3. System will be enforced through a licensing system
  4. All employees covered by a corporate healthcare scheme by 12/31/08
  5. Employees not currently covered by an existing corporate health scheme must be provided with a HBC compliant scheme from 1/1/09
  6. Everyone covered by HBC compliant corporate healthcare scheme by 12/31/09
  7. Every employer is responsible for enrolling every employee with DHA
  8. This includes contractual responsibilities for dependents
  9. Every employee most register at a clinic before employer enrolls them with the DHA
  10. Employers to help employees register with a clinic

 Still have questions?

You are welcome to visit the DHA but I would rather you just ask me.

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