REINVENTING EMPLOYEE HEALTH BENEFITS...REINVENTING EMPLOYEE HEALTH BENEIFTS 1 What is Zane Benefits?...
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REINVENTING EMPLOYEE HEALTH BENEFITS How to Offer a Defined Contribution Health Benefit Employees Love
Transcript of REINVENTING EMPLOYEE HEALTH BENEFITS...REINVENTING EMPLOYEE HEALTH BENEIFTS 1 What is Zane Benefits?...
REINVENTING EMPLOYEE HEALTH BENEFITS How to Offer a Defined Contribution Health Benefit Employees Love
REINVENTING EMPLOYEE HEALTH BENEIFTS
www.ZaneBenefits.com
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What is Zane Benefits?
Zane Benefits is the leader in individual health insurance reimbursement for small businesses. Since
2006, Zane Benefits has been on a mission to bring the benefits of individual health insurance to
business owners and their employees.
Zane Benefits' software helps businesses reimburse employees for individual health insurance plans
for annual savings of 20 to 60 percent compared with traditional employer-provided health insurance.
Today, over 20,000 customers use Zane Benefits' software, services, and support to reimburse
individual health insurance plans purchased independent of employment.
Zane Benefits' software has been featured on the front-page of The Wall Street Journal, USA Today, and
The New York Times. Zane Benefits was founded in 2006 and is based in Salt Lake City, Utah.
Zane Benefits' Partner Program is an opportunity for insurance professionals to provide clients with
custom Zane Benefits solutions. Request a Partner Evaluation.
DISCLAIMER The information provided herein by Zane Benefits is general in nature and should not be relied on for commercial decisions without conducting independent review and analysis and discussing alternatives with legal, accounting, and insurance advisors. Furthermore, health insurance regulations differ in each state; information provided does not apply to any specific U.S. state except where noted. See a licensed agent for detailed information on your state. www.zanebenefits.com
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About this Guide
This guide outlines three simple steps businesses to reinvent employee health benefits with a “pure”
defined contribution approach.
Step 1: Cancel Group Health Insurance (If Offered) / pg. 3
Step 2: Set Up a Defined Contribution Health Plan / pg. 5
Step 3: Educate Employees / pg. 7
REINVENTING EMPLOYEE HEALTH BENEFITS How to Offer a Defined Contribution Health Benefit Employees Love
Introduction
For businesses to thrive in today’s economy,
finding and retaining the best employees is a
top priority. This means offering competitive
wages and competitive benefits.
In the past, group health insurance was the
primary way to offer competitive health
benefits. However, continual increases in
healthcare costs have made offering traditional
health benefits untenable.
Smaller businesses have been particularly
challenged, and are canceling group plans
because they have become too expensive.
Other businesses are canceling group plans
simply because employees can purchase less
expensive coverage on the individual health
insurance market.
But this doesn’t mean businesses are canceling
health benefits altogether. Instead, businesses
are looking for new ways to offer benefits at an
affordable cost.
The solution is to adopt “pure” defined
contribution health benefits.
What is “Pure” Defined Contribution?
Instead of offering group health insurance (a
“defined benefit”), businesses offer a monthly
healthcare allowance (a “defined contribution”)
employees use on individual health insurance.
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Step 1:
Cancel Group
Health
Insurance
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Step 1: Cancel Group Health Insurance
The first step is to cancel group health insurance, if you offer it. Call a customer representative with
the insurance company to confirm the exact steps required to cancel your policy. Your health
insurance agent or broker will be able to assist you, however your business needs to call your
insurance company directly.
You Can Cancel Any Time
Most group health insurance plans are "unilateral contracts". This means you can cancel
a policy at any point during the year. While most carriers “request” 30 days notice, this is
not always required.
Employees Will Be Eligible for a “Special Enrollment Period”
When you cancel your group policy, all those covered will be eligible for a special
enrollment period for individual health insurance. This means they’re eligible to
purchase individual health insurance outside of the annual open enrollment period (ex:
November 15, 2014 to February 15, 2015).
Employees Will be Eligible for Health Insurance Discounts
When you cancel your group policy, you are giving eligible employees, and their families,
access to the premium tax credits (federal discounts on individual health insurance).
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Step 2:
Set Up a Defined Contribution Health Plan
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Step 2: Set Up a Defined Contribution Health Plan
Defined contribution empowers your business to set, control, and
predict all health benefits costs. This is revolutionary for many
businesses.
Zane Benefits has established a defined contribution
health plan, known as ZaneHealth, to do just that.
To set up a defined contribution health plan:
Define your budget by setting any contribution
amount to employees’ health insurance expenses.
Give employees monthly health insurance
allowances. Work with a defined contribution
software provider, like Zane Benefits, to set up a
formal plan; typically a Section 105 Healthcare
Reimbursement Plan (ex: ZaneHealth).
Employees purchase individual health insurance
policies and submit a request for reimbursement.
The business reimburses employees on payroll.
The business only reimburses employees for eligible
premiums up to the amount of their defined contribution
allowance. Without annual renewal increases or minimum
contribution amounts, the business is free to set and
control all benefit costs.
Compared to Group Health Insurance
…
Average Employer Cost For One Year of Group Health
Insurance (2014)*
Single Employee:
$4,944 Up 58% since 2004
Family:
$12,011 Up 65% since 2004
*Source: Kaiser Family Foundation, 2014
In the past, group health insurance was the primary way to provide quality health insurance to employees. Today, group health insurance is out of reach for many small businesses.
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Step 3:
Educate Employees
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Step 3: Educate Employees
The last step is to educate employees about how defined contribution works, and how it benefits them
and their families.
Educate Employees About…
How defined contribution works.
Why the company has decided to offer health benefits in this way (remember, it is great for
them too!)
The benefits of individual health insurance and defined contribution such as plan choice,
flexibility, and cost-savings.
How to purchase individual health insurance for themselves and their family.
How to request reimbursement and use their defined contribution employee portal.
Tip: See examples of employee communications in this eBook on transitioning to defined contribution.
Why Employees Love Defined Contribution
Let’s look at these employee benefits in detail…
Access to the Best Health
Care
Coverage for All
Employees
Access to Health
Insurance Tax Credits
Predictable Costs for
Employees
Easy to Understand
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Access to the Best Health Care
Because employees choose which individual health insurance
policy to purchase with their allowance, they can pick the
health coverage that best meets their needs.
All employees are different, and employees say they no longer
want a one-size fits all health insurance plan. Rather, they
want health plan options to customize their benefits.
With their health insurance allowances, employees select:
Any type of plan, from any insurance carrier.
The network of providers and doctors they want to see.
The coverage level they want (the deductibles, co-pays, co-insurance, etc.).
Tip: Because some employees may not be comfortable selecting an individual health insurance policy
on their own, designate an insurance professional to help each employee select the right plan. This
also shows employees you care about them and want to improve their health benefits.
How does individual health insurance work? See this guide:
The Ultimate Guide to Individual Health Insurance
Coverage for All Employees
All employees (regardless of health conditions) are now able to
purchase an individual health insurance policy that is equal or better
for them than existing group health insurance options.
“61% of employees report
that being able to customize
benefits would increase their
loyalty.”
~ MetLife 2013 Study of Employee Benefit Trends
benefittrends.metlife.com
As of 2014, All
Individual Health
Insurance Plans
are Guaranteed-
Issue
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Access to Health Insurance Tax Credits
Employees can use their health insurance allowance to purchase
policies from the new health insurance marketplaces. This gives
employees access to federal health insurance tax credits to lower
the cost of their premium. Eligibility for the tax credits is based on
income and household size. Households with income up to 400%
above the federal poverty line (FPL) are eligible (up to $46,680 for
an individual in 2014, or $95,400 for a family of four in 2014).
Predictable Costs for Employees
Employees have a clear budget to spend on health insurance. Individual plans are, on average, 20%
less expensive than the same group coverage and rates cannot change each year because of a medical
condition.
Easy to Understand & Use
Lastly, employees value health benefits that are easy to
understand, and easy to use. Similar to the transition
from pensions to 401(k) retirement plans, the defined
contribution approach requires employees to take
more control of their health benefits.
Defined contribution administration software provides
employees easy 24/7 access through an online portal
where they can see benefit information and submit
requests for premium reimbursement (“claims”). See an
example from the Zane Benefits employee portal.
Employees are only
eligible for tax
credits if your
business does not
offer group health
insurance.
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Next
Steps & Conclusion
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Next Steps
Ready to get started? Here is a timeline of simple steps to transition to a defined contribution
health plan, such as ZaneHealth.
60 days prior to your group health insurance plan renewal date, ask your broker to deliver
the renewal rates as early as possible. Ask for a comparison to equivalent individual
insurance policies.
45 days prior to your group health insurance plan renewal date, request a group versus
individual insurance cost analysis from your broker and your defined contribution
provider, like Zane Benefits. Review cost savings and any changes in benefits.
30 days prior to your group health insurance plan renewal date:
Send a termination letter to your insurance carrier.
Schedule an employee transition meeting with your broker.
Set up a Healthcare Reimbursement Plan with a defined contribution provider, like
Zane Benefits.
Notify employees of their monthly healthcare allowance amount.
Schedule 1-on-1 sessions for employees to meet with your broker to start shopping
for individual plans.
Start seeing the savings and business results!
Conclusion
By offering a defined contribution health plan, such as ZaneHealth, your business is able to offer
quality health benefits at a controllable cost, with less administrative time.
The Result? Employees love their health benefits again!
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Additional Health Benefits Resources
View our Library of Free Resources at: www.zanebenefits.com/resources
Subscribe to our Blog! Daily Updates on Health
Benefits, Health Reform, HR, and Defined Contribution.
www.zanebenefits.com/blog
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What is Zane Benefits?
Zane Benefits is the leader in individual health insurance reimbursement for small businesses. Since
2006, Zane Benefits has been on a mission to bring the benefits of individual health insurance to
business owners and their employees.
Zane Benefits' software helps businesses reimburse employees for individual health insurance plans
for annual savings of 20 to 60 percent compared with traditional employer-provided health insurance.
Today, over 20,000 customers use Zane Benefits' software, services, and support to reimburse
individual health insurance plans purchased independent of employment.
Zane Benefits' software has been featured on the front-page of The Wall Street Journal, USA Today, and
The New York Times. Zane Benefits was founded in 2006 and is based in Salt Lake City, Utah.
Zane Benefits' Partner Program is an opportunity for insurance professionals to provide clients with
custom Zane Benefits solutions. Request a Partner Evaluation.
DISCLAIMER The information provided herein by Zane Benefits is general in nature and should not be relied on for commercial decisions without conducting independent review and analysis and discussing alternatives with legal, accounting, and insurance advisors. Furthermore, health insurance regulations differ in each state; information provided does not apply to any specific U.S. state except where noted. See a licensed agent for detailed information on your state. www.zanebenefits.com. [Rev. April 27, 2015]
