Medical Gap Plans - Reduce Health Plan Costs

voluntarybenefitprograms.com
Medical Gap Strategy
Creative Health Plans Cost Reduction

Executive Summary: Medical Gap Plan
Allows employers to reduce group health plan costs 10% to 20%
This also helps people guard against large out-of-pocket medical expenses.
1)Reduce plan costs
2)Improve benefits

Health Plan Costs =
Big Problem

Worker premium share
up 159% in 10 years...
...Not Sustainable!

Growing need for Supplemental Medical insurance
A 2007 study*
found that the
majority of
personal
bankruptcies are
due to medical
expenses, even
for those with
healthcare
coverage.
36% of adult
Americans have
no savings
earmarked for
emergencies,
according to the
Consumer
Federation of
America.
76% of Americans
are living
paycheck-to-
paycheck,
according to CNN
Money.
*Medical Bankruptcy in the United States, American Journal of Medicine, 2007
Employees Need Protection

Addressing Needs
 There is increased interest in supplemental medical and hospital
indemnity products at the workplace, as employers continue efforts to
control health plan costs.
 The benefit may be offered employer-paid, or employee-funded
(voluntary), or a combination of the two.
 Coverage is offered on a guarantee issue basis with no medical
underwriting needed. Dependent coverage is available.

A 2011 survey indicated that more than 50% of employees say they
are concerned about costs NOT covered by medical insurance*.
*Met Life study of employee benefit trends 2011
Addressing Concerns

Over a third of employees say that supplemental benefits
are a reason to stay with or join an employer*
*Met Life study of employee benefit trends 2013
Satisfying Employees

Main Points
Gap plan Savings Opportunity:
Create savings from health plan changes
Gross savings can be 15% to 30%
(by moving to largest out of pocket options)

———Supplemental Medical Expense(Gap Plan):
• Provides employer solution TO SAVE MONEY $$$
• Enables people to fill medical gaps...protects finances
• Gives brokers a creative solution to reduce costs

The Gap Medical Strategy uses an employer sponsored supplemental
insurance plan paired with a high deductible health plan.
Instead of giving the medical
carrier 100% of premium...
Give the medical carrier 75%
and gap carrier the balance
This can reduce the overall
cost of group medical...

Fill in plan changes with an insured medical gap plan
(so employees are not hurt by plan changes)
Employers will pay for this if the numbers work
Next

Sample Out Patient Benefits
Pays a first dollar benefit for outpatient
expenses incurred up to plan maximum
Examples of expenses covered:
 Surgery in a facility or a doctor’s office
 Emergency Room – Accident or Sickness
 X-ray, Lab, Diagnostic Testing, MRI
 Outpatient Radiation/Chemotherapy
 Specialist Visits
 Physical Therapy, Chiropractic, Rehab

Sample In-Patient Benefits
Pays a first dollar benefit for inpatient out of
pocket expenses incurred up to the plan maximum
Examples of covered expenses:
 In-Patient Surgeries and Hospital charges
 Physician In-Hospital charges
 X-ray, Lab, Diagnostic Testing, MRI’s

Example - Employer advantage
Renewal Plan:
$500 Deductible
80/20 Coinsurance
$3,000 Out of pocket max
#of lives Mo. Cost
EE only 30 $675
EE + SP 7 $1,350
EE + Ch 5 $1,170
Family 8 $1,890
Monthly Premium $50,670
Proposed Plan:
$2,500 Deductible
80/20 Coinsurance
$5,000 Out of pocket max
#of lives Mo. Cost
EE only 30 $450
EE + SP 7 $900
EE + Ch 5 $810
Family 8 $1,350
Monthly Premium $34,650
Total Savings: $16,020 monthly! ($192,240 annually)

Gap Insurance Claim Example
 The following is an example of how our Gap plan works. The
example is based on a $2,500 deductible medical plan, with
20% coinsurance, and a maximum out-of-pocket limit of
$5,000.
 The example is an in-network hospitalization claim for a
covered surgery, with an in-patient plan benefit of $5,000.

$15,000 Hospital & Surgery Claim (Employee advantage)
Without GAP With GAP
In-Patient Benefit In-Patient Benefit
Deductible: $2,500 Deductible: $2,500
Co-Insurance (20%): $2,500 Co-Insurance (20%): $2,500
Max Out-of-Pocket: $5,000 Max Out-of-Pocket: $5,000
In-Patient Gap Benefit: $0 In-Patient Gap Benefit: $5,000
Insured’s Out-of-Pocket:$5,000 Insured’s Out-of-Pocket: $0

The Supplemental Medical Expense plan (Gap plan) is an insurance
product which reimburses certain out-of-pocket medical expenses to
protect employees.
It is paired with a lower cost major medical plan, and works most
effectively with high-deductible plans. The combination allows the
employer to find savings and keep employees whole.
Coverage offered on a guarantee issue basis with no medical
underwriting. Dependents are covered as well.
Medical Gap Coverage

Gap premium NOT counted for Cadillac tax
This reduces any potential penalty - (IF properly structured)
The initial annual threshold amounts for the tax are:
–$10,200 for self-only coverage
–$27,500 for coverage other than self-only
Family limit example with 8% premium growth:
2016 $27,210
2017 $29,387 (maximum ceiling of $27,500 exceeded)
2018 $31,737 (over the limit by $4,237)
$4,237 of “compensation” subject to 40% excise tax. Total tax paid: $1,695...per family!
Bonus for Forward Thinkers

Safe for Employer
Saves
Premium
ACA
Compliant
HRA
Replacement
May
Reduce
Cadillac Tax
Insured
Plans or
Self Insured

Make us your resource for gap plans
We help you bring clients in a new programs:
 We deliver tangible savings
 We help you bring innovative solutions
 We help you cross sell additional benefits

Next…
 We are a Managing General Agency for the top Medical Gap programs,
providing analysis and turnkey solutions with pricing & benefits.
 Add us to your team & let us help you with win - win
 Gap plans DO NOT require waiting for an annual medical renewal.

Why…
 The trend for health plan costs is up.
 Our cost savings solutions for groups help you win
 We provide you with the top carrier comparisons & U/W
 We also help you plan enrollment & communication
 Don’t rely on single carrier solutions and risk your business….

Service…
We do the heavy lifting:
 We put the programs together
 Provide options & value added programs
 Create an enrollment strategy
 Carrier comparisons

 We bring you new ideas that most group
brokers are not using
 We Seamlessly become part of your team
and and work behind the scenes on your
behalf.
Your Turnkey Solution...
*Next step: Contact us for a strategy call

Contact:
Peter Toth
Peter@voluntarybenefitprograms.com
www.VoluntaryBenefitPrograms.com
1-800-579-7731

Medical Gap Plans - Reduce Health Plan Costs

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