THE CHALLENGE: Despite the best efforts of all involved, there’s always been a dose of guesswork in the employer health insurance world. Will the premiums cover the claims paid? Will enrollees utilize their benefits? Will the deductibles and copays be set too high, too low or, just right? Carriers hire highly educated mathematicians to help but with so many dials to turn, there’s still some measure of conjecture in it all. After all, serious illnesses often occur without much warning. For our client, a Native American tribe with more than 1,000 employees, misjudging any of the above can translate into a big bite out of its bottom line. This was especially true because the tribe has a self-funded health plan. This means no fixed monthly premiums, but also no insurance carrier to cover medical expenses and that the burden of doing so falls directly onto its shoulders. The problem was the tribe every year was spending on health care amounts that were inching ever-closer to what it was budgeting. Oh, and unlike most self-funded plans, our client wasn’t interested in paying the additional premium for a stop-loss policy, which would cap its exposure in case of really big claims.
OUR SOLUTION: To us, it was plain to see that a top-to-bottom reorder was in order. This was especially the case in light of the new fiduciary duties imposed on employers under the Consolidated Appropriations Act of 2021. The law in essence requires employers to do all they can to protect their employees from overpaying for their health benefits. So, we started digging into things, putting our analytics team to work to sift through reams of claims and utilization data to get a much clearer understanding of where the money was going and where it was likely to go in the years ahead. As we delved deeper, it became clear that our client and its employees could save a good deal of money by making sure that claims involving Native Americans enrolled in its health plan were filed under a federal law that allows reimbursements to health care providers at Medicare-like rates. We recommended a new third-party administrator; a change in its provider network; a new, less-costly option for drug prescriptions; the addition of health screenings, which can help detect serious problems sooner; and even doubled the number of massage therapy sessions available to members every year.
THE OUTCOME: The savings achieved as a result of our plan, amounting to more than $500,000 a year, are now helping our client quickly build up its rainy-day reserves for those unforeseen events as they happen. Our predictive modeling shows that the tribe can save even more in the years ahead. Dollars aside, it now has a reimagined, modern-day health plan with enhanced benefits and one in which tribal members’ costs are entirely absorbed by the tribe. In other words, no premiums, no deductibles, and no copays for enrollees.
The Mahoney Group, based in Mesa, Ariz., is one of the largest independent employee benefits and insurance brokerages in the U.S. For more information, visit our website or call 877-440-3304.
This article is not intended to be exhaustive, nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice.