M4 COSTING & PRICING

Question 1

WHAT ARE THE FINANCIAL PARAMETERS FOR BENEFITS PLANS?

Answer 1

1. Cost-sharing policy

SHORT-TERM STRATEGY- push employees to a certain plan or plan program

LONG-TERM STRATEGY-

What is the IMPACT ON EMPLOYEES AND DEPENDENTS?

Question 2

WHAT ARE THE NINE STEPS TO THE BENEFITS PRICING PROCESS???

Answer 2

1. What are the business objectives and HR strategy we need to tie back to?

Risk-bearing or risk avoidance

2. Identify the current cost subsidy ( cost sharing) look at the history and past decisions to understand how to proceed
3. Collect data; what is the claims administration cost
4. Cost each option - 12 or 18 months, are these paid claims or incur claims
5. Modify costs, do we have stop loss coverage
6. Enrollment effect, including cost differences by geography
7. Employer costs
8. Employee contributions
9. Projections

Question 3

WHAT SHOULD THE COMPANY CONSIDER WHEN DETERMINING THEIR PHILOSOPHY ABOUT BENEFITS SUBSIDIES???

Answer 3

1. Who is the commitment being made to?
2. How does the organization define its subsidy? Do you reward years of service? Lower subsidy to high paid? Geographic differences?
3. How often should this Philosophy be reviewed?
4. Are some employees collectively bargained?
5. What about part-time and temporary employees? Affordable Care Act?
6. What are other companies doing?

Question 4

HOW DO YOU KNOW IF YOUR PROPOSED PRICING IS DURABLE???

Answer 4

1. Model multiple claim utilization and enrollment scenarios

2. Assess communication messages to match your philosophy ( cost savings, wellness, etc)