Get your tar and feathers ready because I am going to make you very uncomfortable. Traditional Group Major Medical is no longer the optimal employee benefit for every workforce. Slowly over the last 10 years, a growing number of industries have struggled to afford health insurance for their employees. The result? Major cost shifting with increased deductibles and payroll premium sharing. This trend has resulted in an all-time low in employee satisfaction and resulting loss of effectiveness as a recruiting and retention tool
To take it a step further, the conventional wisdom that major medical is “gold standard” and top of the list of preferred employee benefit options, is simply untrue for many, if not most American workers. Let’s examine the facts:
· The average premium for Major Med is – $464 p/m
· The average deductible for Major Med is – $3,328 individual
· The average major med out of pocket (not counting premium) – $1,618
· Most employees never reach their deductibles
CMS 2017 survey
Misconception #1 Everyone is better off with Major Medical coverage: Working class (hourly employees) number one concern is out-of-pocket costs for medical services. Survey after survey suggests that catastrophic protection falls far behind in importance to out of pocket expenses and paycheck deductions. Fact: Only a little under 2% ever exceed their out of pocket limits
Misconception #2 Major Medical plans are superior motivation for recruitment and retention of employees: Although this remains true for many white-collar executive employees, the vast majority of working families seem to prefer 1st dollar coverage that limits cost sharing and emphasizes smaller out of pocket costs for routine and even moderately severe medical services. Fact: Given a choice, most hourly workers would take a taxable increase in salary over major medical coverage.
Misconception #3 Skinny Options aka Limited Medical Plans shortchange employees and leave them vulnerable to catastrophic claims that will bankrupt them: Contrary to popular myth, indemnity plans can be viable alternatives to traditional employee benefit solutions. They easily expand coverage to include limits of $200,000 or more and include a wide verity of standard coverage, such as: Hospital/Surgical benefits, with lab, advanced diagnostics, non-occupational accident, outpatient surgical/anesthesia and even cash settlements for critical illness diagnosis. Some dread diseases (heart, stroke, kidney and cancers) can average $100,000 to $200,000 with only a very few (mostly end stage events) exceeding these limits. High limit indemnity plans that eliminate coinsurance, out of pocket limits and deductibles, provide much stronger incentives to current and prospective employees to take employment or remain on the job. Cost for these “super indemnity” plans? Usually 50% of major med or around $100 to $250 per employee per month!
Our Conclusion – If benefits, particularly health insurance benefits are in place for recruitment, retention and reward purposes, they are failing badly, and other options need to be considered. We encourage you to consider including Limited or *MidMec plans for your clients this planning year. These plans have grown from a secondary “plan of last resort” to mainstream viable solutions that resonate with employees and represent potential high perception of value tools for recruitment, retention and reward.
*MidMec is a branded name referring to a high limit Hospital Indemnity plans with added MEC for ACA compliance purposes.