On July 1st of this year, Medica Insurance rolled out a new product line called “My Medica” which some feel is the newest concept in health care plan options. You may have read or heard headlines about this the past few months, and as one of an exclusive group of accredited insurance agents (not all agents have access to this product), I would like to briefly explain the concept and how this product works.
The plan is designed for large group clients ((50+ employees) expanding to 25+ in January) who are interested in giving their employees the option of choosing a plan design that best fits their lifestyle and needs. The concept is an expansion of the “dual option” approach that has been in place for many years, as “My Medica” offers a variety of 20 plans for employees to choose from. Additionally, this is designed for employers who are interested in contributing a fixed dollar amount to employee benefits rather than a percentage of each employee’s premium. So how does this all work? First, let’s explore the plan from the employee’s perspective.
As an employee, everything would be done online and the process begins with the creation of a “My Medica” account followed by the open enrollment into the employer’s group health plan. The easiest way for an employee to navigate between 20 different plan designs is to take the “needs survey” that will ask questions about income, family demographics, overall health, etc... From there, “My Medica” will select the three best plans designs according to each individual’s answers. That means a family of five with a tight budget will see three different plans than a well established single person who can afford to pay more at the point of service. Of course for those employees who know exactly what they want, the survey can be bypassed and employees can compare and contrast all 20 plans side by side. So how does cost play a part in all of this? It’s time to look at the “My Medica” plan from the employer’s perspective.
As an employer you are accustomed to submitting underwriting information to an insurance company and receiving age band rates or composite rates (single/family rate). With the “My Medica” plan you would submit the same underwriting information and instead of age or composite rates, employers would receive a “contribution” dollar amount minimum. This minimum contribution is set at roughly the middle of the 20 plans scale so as an employee considers their options, the price they see is a direct reflection of the employer contribution. That minimum could be considerably less than previous averages and of course employers are encouraged to contribute more than the minimum. Increased contribution obviously means decreasing cost to the employees.
So how does Medica expect HR departments to manage 20 different plans offered to over 50+ employees? “My Medica” is proposing to take all of the service work away from the employer by having plan design specifics available only to the employee via their “My Medica” online account, or an 800 hotline. HR departments will not be able to answer questions, process changes, etc. Employees must use the “My Medica” services available to them. HR will receive pay roll deduction amounts and some plan design specifics, but ultimately the goal is to shift the work load from the employer to the insurance company. Of course that shift in work load comes at a premium, which like any new concept is yet to be determined. (will that premium load make it less competitive?) At this point all indicators point to this being a competitive option, but only time will tell how premiums will hold up against claims, the shift in administration, and the cost of ongoing technology.
As always the Bates Insurance Group will keep its finger on the pulse of this new concept and will keep you up to date on its effectiveness. The brightest part of any new approach is more choice for you and your employees as well as alternatives to the never ending battle of containing health care costs. A combination of employee cost sharing, employer contribution, and consumer driven health care decisions, are bound to help us find balance once again in health insurance...
