Answer: These plans are now governed by and dependent on disincentives, they do still serve an important function and enjoy a certain perception of value, but only for those who need to protect assets (homes, investments, and pensions) this demographic represents about 50% of salaried employees and only around 5% of moderate to low wage hourly workers. This is where the promise of traditional plans begins to fall apart. Providing a low wage worker with a plan that requires substantial shared expense up front and most tangible benefits pushed to the back end, is of little perceived value to that employee, therefore a rather dubious “benefit of employment”, yet we (brokers and employers) still believe we are providing the gold standard in employee benefits and everything else is settling for second best.
The recent emergence and popularity of “Access Based” plans (MEC and MEC Plus Hospital Indemnity Plans) aka (Value Based or Incentive based) among service sector employees (food, nursing home, hotel, agriculture, and retail) have been explosive, particularly after the Affordable Care Act became law. Employers who previously did not provide health insurance to working-class employees found that not only were these indemnity style plans affordable, they were more popular than traditional plans, largely due to the elimination of disincentive barriers such as deductibles and coinsurance. Unanticipated was the potential to retain employees with a relatively small budgetary impact, particularly when compared to the high cost of turnover.