Rich vs. lean health plans: Navigating your options.
Health plans are like snowflakes—no two are exactly alike. There is often one unifying characteristic, though: Traditional health insurance is too expensive.
The problem? Plans span the range from “lean benefits,” with a restricted network, high deductibles, limited choices, and lower monthly premiums, or “rich benefits,” offering a broad provider network and lower out-of-pocket costs—but higher monthly premiums.
For employers, choosing the right solution for their employees can feel like a trade-off: balancing the cost of an insurance policy and the level of coverage and choice it provides.
Features of lean health plans
- Higher out-of-pocket costs: Usually comes with higher deductibles, copays, and coinsurance, which means employees will likely pay more when they need care.
- Narrow networks: The number of available providers and hospitals is limited, and accessing specialized care may require referrals, which can add complexity.
- Limited coverage: Coverage may be more restricted, with fewer services covered beyond the minimum requirements set by the ACA. Access to certain treatments may be limited, and the pharmacy drug list may be more restricted.
- Increased financial risk: Higher out-of-pocket costs can pose significant financial risks, especially if employees require extensive medical care. Essentially, employees are taking a gamble on their health expenses, hoping they won't need extensive medical services.
- Lower premiums: Typically have lower monthly premiums, making them more affordable on a month-to-month basis
Features of rich health plans
- Lower out-of-pocket costs: Usually features lower deductibles, copays, and coinsurance (a more traditional model).
- Extensive network: These plans are less likely to restrict access to a limited set of providers, offering national and wider coverage options.
- Comprehensive coverage: They typically cover a broader range of services, including more extensive prescription coverage, specialist visits, and preventive care.
- Reduced financial risk: With lower out-of-pocket costs, the financial risk is minimized if significant medical care is required.
- Higher premiums: The extensive coverage and broader network options usually result in higher monthly premiums, which can make these plans more costly for both employees and employers.
How do employers choose?
Employers can find themselves stuck between weighing the health care needs of their workforce—trying to offer the richest benefit possible—and managing the financial constraints of their business. Often they choose to offer a few plan options to meet the diverse needs of their employees and do so in the most cost-effective way possible.
Rich plans tend to resonate more with individuals who expect to use a lot of medical services, have chronic conditions, or simply want the peace of mind with predictable health care costs.
Leaner plans are typically more suitable for healthier individuals who don’t often utilize medical care and prefer to save on monthly premiums, or who accept the risk of unpredictable, higher out-of-pocket costs.
Historically employers have needed to offer a few options to meet the needs of their employees in the most cost-effective way possible. This is mainly because “no one has been able to offer a rich plan design in a cost-competitive way,” explains Alison Kosup, Senior Vice President of Strategy and Emerging Markets for Surest. That is, until Surest was introduced to the market. Surest, she says, is a “game-changing offering that eliminates traditional trade-offs between employer cost-savings and employee choice.”
Now is the time to reassess your benefit offerings
The Surest health plan is designed to give members tools to see cost and coverage information ahead of time. With this visibility, they’re empowered to make informed decisions, often leading to less-invasive, more cost-effective options. This can free up funds to lower cost-sharing burdens—all while providing a valuable, rich benefit.