NEW MiddleMEC HEALTH PLANS
An Alternative to Major Med, Limited Med, MVP or MEC
2018 Facts and Observations
Fact: Given current low unemployment statistics for full or part-time hourly wage workers, it is obvious that these employees are in very high demand. New efforts must be undertaken to create better benefit strategies to attract and retain these valuable service sector workers.
- Observation: Why do employers continue to take this workforce for granted and force unpopular health insurance plans on them? Current options are heavily back-loaded (high deductibles and coinsurance) or limited to upfront first dollar, mostly preventative services (MEC Only).
Fact: According to HHS statistics. 97.5% of employees covered by group insurance plans never exceed their deductible levels (Bronze level major medical) making it difficult for the recipients of these plans to perceive any value or feel loyalty to the sponsoring organization/employer
- Observation: It is very likely that even fewer low-wage hourly employees reach or exceed major medical deductible levels. We estimate that fewer than 1% even need catastrophic coverage.
Fact: Fewer than 1/10 of 1% of hourly workforce employees enroll in subsidized exchange plans, when offered any employer-sponsored health plan.
- Observation: Why risk the cost and excessive exposure of sponsoring an MVP or Bronze level Major Medical plan, when the exposure to the Minimum Value (B penalty) is statistically insignificant?
Fact: From our experience in this market (20 years) moderate/low wage employees actually prefer first dollar coverage ($0 deductible/$0 coinsurance) over health plans containing front loaded financial barriers but a catastrophic coverage element (despite what the CFO or many agents believe)
- Observation: A properly designed mid-med health plan, with little or no upfront/out of pocket cost, substantial ($100,000 or more) inpatient medical/surgical benefits, that falls between a so called limited (skinny) medical and a more traditional MVP or major medical Bronze plan, will better serve to attract and retain employees and comply with the major components of ACA.
Radical New Approach – MiddleMEC (something in between)
Given the facts and observations above, we submit that a new approach, finally bridging the gap between the so-called skinny approach and the overly front-loaded and expensive high deductible major med/MVP options should be considered. We call this new approach MiddleMEC
What is MiddleMEC and how does it differentiate from more traditional hourly workforce solutions? First of all, we believe a “Group” plan should benefit the majority of the Group, providing a plan that serves the needs of 1% to 3% of the recipients is counterproductive and a waste of resources.
In the table below, we have compared Bronze level coverages (using ACA required Essential Health Benefits EHB) as you can see, an argument can be made that our proposed mid-level benefit design is comparable to a major med plan on most EHB required benefits. Plus, there is far less up front cost to the member, which would drive employee appreciation, retention and productivity.
What About Chronic or Catastrophic Events?
Regardless of how statistically few chronic or catastrophic events take place, we recognize that they do occur, even in the low-wage hourly worker population. This risk or exposure can be mitigated by simply adding inexpensive work-site or imbedded Critical Illness/Accident riders. We recommend including these riders with a minimum cash CI payout of $15,000 and a minimum $5,000 Non-Occ Accident coverage. Although a CI plan will not pay for all of the cost of treatment for a dread disease, it will provide cash “safety net” to begin or maintain necessary treatment for the short term.
During this term, the affected employee and or family member can seek catastrophic coverage through the exchanges or on the open market. Although expensive, the cost will likely be far less than the cost of recovery.
Once again, we do not want to be insensitive to the plight of the catastrophically ill member, we only suggest that driving plan design decisions for 3% of your workers is a failed strategy that we believe our suggested plan designs will rectify.