Know Your Exposure to Large Drug Claims

Know your Exposure to large drug claims

What do you think the main objective is for employee group insurance programs? Truly, they are there to protect the 20% of your employees that need reimbursement of a larger than average amount of healthcare related expenses. As a retention/attraction tool, certainly employees expect to have “benefits” as part of overall compensation. But the premise behind it is – insurance.

Group insurance is designed to protect employees from significant and unforeseen financial burden BUT, employee benefits plans are starting to lose sight of this “protection” aspect. As a result of new “specialty” medications (learn more), plans (especially smaller plans) are exposed to large increases in rates.

Do you know what your exposure is or how you are able to absorb these costs? You need to test this.

With significant pressure on rates, employers are forced to consider plan changes that lessen or cap the protection and minimize the liability. However, without real insurance in the plan, the program simply becomes a series of smaller tax-free claim reimbursements. This might satisfy 80% of your employees but it could be devastating to those with significant claims in that year.

Trust me, we are having this exact conversation with all of our clients and we continue to provide guidance on how to manage these high claims. We help make them aware of the risk to their budgets while also staying true to their philosophy of how they wish to treat their people. Somewhere in the middle is a solution that will protect the employee but provide some kind of cost control. There are lots drug plan design options to consider and it is important to know what’s available.

If you are not having these conversations with your broker/consultant – you could be in for a very unpleasant shock at your next renewal. Need a fresh perspective… we are happy to provide it.