Claim audits

It makes little sense to initiate things like prevention plans when employers are paying out thousands or millions of dollars in erroneous claims. Unfortunately with health care plans becoming ever more customized and therefore complicated it’s increasing easy for medical claims errors to occur. Human Resource consultants towers with financial errors is 3% but in two recent years. Towers Perrin found the actual percentage of claims with financial errors were 6.3% and 6.6%. The industry standard for percentage of claims dollars actually paid in error was 1% in two recent years the actual percentage of claims dollars paid in error were 3.5% and 3.3%. Setting standards for errors and then aggressively auditing the claims being paid may be the most direct way to reduce employer health care expenses.

Other cost control options

Employers are taking other steps. Savings come from automating health care plan administration for instance by making online enrollment mandatory. Other employers are using defined contribution health care plans. Under these plans each employee has a specific dollar amount medical allotment that he or she can use for co-payments or discretionary medical costs, rather than a specified health care benefits package with open ended costs. Outsourcing health care plan administration to outside companies for a free is another option. For example, 84% of firms in one survey said they were outsourcing employee assistance and counseling and 53% were outsourcing health care benefits administration. Many firms are reducing or eliminating retiree health care coverage. One study found that about 13% of surveyed employers have reduced subsidized health benefits for their future retirees in the previous two years. (About 17,000 unionized blue collar employees at GE staged a two day strike protesting increased premiums for the firm’s 25,000 early retirees). Small firms are joining benefits purchasing alliances. By banding together to purchase health care benefits these employers hope to obtain better choice and purchasing power. Other employers are encouraging employees are have non-urgent medical procedures abroad where the costs are lower.

Long term Care

Today, the oldest baby boomers are in their 60s, and long term care insurance – care to support things like nursing assistance to former employees in their old age – is a key employee benefit. The Health Insurance Portability and Accountability Act, enacted in 1996 , lets employers and employees deduct the cost of long term care insurance premiums from their annual income taxes, making this particular benefit even more attractive. Employers can provide insurance benefits for several types of long term care such as adult day care assisted and custodial care.

Life insurance

Group life insurance

Provides lower rates for the employer or employee and includes all employees, including new employees, regardless of health or physical condition.

In addition to hospitalization and medical benefits most employers group life insurance plans. Employees can usually obtain lower rates in a group plan. And group plan usually accept all employees – including new probationary ones – regardless of health or physical.

In many cases, the employer pays 100% of the base premium which usually provides life insurance equal to about two years salary. The employee then pays for any additional coverage. In some cases the cost of the base premium is split 50/50 or 80/20 between employer and employee. In general there are three key personnel policies to address: the benefits paid schedule (the amount of life insurance benefits is usually tied tot e employee’s annual earnings), supplemental benefits (continued life insurance coverage after retirement for instance); and financing (the amount and percent that the employee contributes).

Accidental death and dismemberment coverage provides a lump sum benefit in addition to life insurance benefits when death is accidental. It also provides benefits in case of accidental loss of limbs or sight.