Case Study:

New Strategy Increases Health Plan Participation

AssuredPartners Government Contractor Solutions

Quick Facts

Type of Operation: TRICARE / MEDICARE Contractor

Number of Employees: 800

Brokerage Services Provided: Employee Benefits & Service Contract Act Expertise

Valued Client Since: 2012

Problem

The client experienced severe adverse selection in their health plan each year. As the cost of the health plan rose, less of their employees participated. Granted a set amount of fringe benefits each hour worked, employees saw the cost of the health benefit program offered by their employer and opted instead for a retirement contribution in lieu of benefits. Being self-insured, the problem compounded over the years until the cost of the program exceeded the hourly benefit allotment provided by the government. The program in general was neither valued by the contractor or the employees, and a change needed to be made.

Solution

To fix the issue with adverse selection, our Government Contractor Solutions team advised the contractor at the time to make significant changes to their benefit offering as allowable under the Service Contract Act which the employees and the employer were subject. To bring the cost of the plan down, we worked with the contractor and the insurance carrier to provide pricing and reinsurance based on the hypothetical that all employees participated in the health plan absent proof of they had other group health coverage already in place. Secondly employees which took no action, were automatically defaulted in the plan. We discussed the pro's and con's with the contractor's field leadership team and decided that it was the best approach to heal the benefit program. We subsequently traveled to each jobsite to enroll the employees and explain the coverage.

Results

The participation rose from 250 of 800 to nearly 700 of 800 employees on the plan. In turn the cost of the plan was lower and all employees electing medical coverage could also receive a retirement contribution within the health and welfare fringe allotted by the government on their contract. Almost 10 years later the contractor still considers the decision to require participation in the medical plan (absent proof of other coverage) as a defining moment, and continues to give them a competitive advantage in hiring and maintaining employees.