The AGC Alternative: How to Gain Control Over Your Benefits Budget and Offer Employees More of What They Want
What we will cover today The AGC Alternative Why Employers Offer Benefits Employee Benefit Program Challenges Current Solutions A Technology Based Solution How Defined Contribution Works The AGC Alternative Real Case Study The Future of Private Exchanges Questions
Why Do Employers Offer Benefits? Increase your appeal attracting the employees you want Minimize your Turnover Rate retaining the employees you want Better Moral Healthier Employees = Better Job Performance Increased Productivity
Plan Costs Employee Benefit Program Challenges Health care costs have outpaced GDP growth since the 1970s and continue to rise. Current trend is 9% - 10% annually. Cost of benefits as a percentage of compensation have increased from 5% in 1950 to 30-40% today Employees generally do not understand the total cost of the plan Increased Administration Increased Compliance Limited Choice or customization Most employer plans provide more coverage than some employees need
Why are these the only choices year after year?
A Solution A Technology Platform Expand On What You Are Already Offering Web based Technology Simple to use Internet based enrollment process Much more choice available to employees for all types of insurance Robust technology includes strong decision support tools Personal recommendations based on individual needs Still a group (employer) sponsored program Defined Contribution Model Employer makes available a fund to employees Employees choose their own plans based on individual needs Employer cost is much more predictable and easier to budget
Defined Contribution Allows employer to predetermine a set dollar amount on a per employee basis for each employee to spend The DC is set based on current costs, employers budget, and benchmarks More plan choice allows employees to shop for the best plan for them at the cost they choose Significant flexibility in how the DC is structured Very few people spend other people s money as carefully as they spend their own. Milton Friedman, renowned economist
Manage Costs Defined Contribution - helps to budget and manage current costs Employee Health Management (Wellness) manage long term costs Help employees find the right plan Consumer Driven Health Plans HSA S and HRA s Reduce Administration
Why Employee Choice Matters On average, 8% - 10% of an employee population does not incur any claim in a given year An additional 13% to 18% incur less than $500 in claims Almost 50% of an average group incurs less than $1,000 in claims (MetLife s 12 th Annual U.S. Employee Benefit Trends Study)
Why Health Management Matters Keeping healthy employees healthy Assisting employees with chronic conditions better manage the condition helps the employee and helps the plan costs Happier and healthier employees are more productive employees For every 100 employees, 70% of costs are for conditions that are lifestyle related
The AGC Alternative Exclusively available for AGC Members Currently available in these states for groups with less than 100 employees: (More will be added through 2015) AZ CT FL GA IL MD ME MN NC NJ NY OH PA SC TN TX VA WI Available in all states for groups with more than 100 employees Must have at least 10 eligible employees
The AGC Alternative The Carriers/Partners Liazon - Technology Platform Willis Broker of record Aetna Medical MetLife Dental, Life and Disability Group Vision Services (Eyemed) Vision Viverie Wellness Innotech Call Center
Benefits of The AGC Alternative For You Better cost predictability and budgeting Robust technology platform with administrative support and carrier connectivity No cost to member firms Consultation on ACA compliance and general compliance issues Call center to take work off of your desk No cost to member firms A more attractive plan offering for your employees For Your Employees A personalized employee experience with more plan options Robust decision support tools An insurance program designed for each employee Wellness education that s tailored to individual needs Online and live customer service Higher satisfaction with their benefits
Case Study Employees find the right insurance Defined Benefit Employer offers 2 basic health plans and one dental plan Employer covers 70% of plan Employer costs can vary depending on how many employees enroll in each plan Employee has no idea of employer s actual costs Employee always selects the top PPO plan because it s the best available Defined Contribution Employer now offers 5 health plans, dental and vision Employer now provides a flat amount per employee regardless of the plan they choose Employee knows exactly what each plan costs and now has plan options that scale better to their lifestyle When given choice and control to spend their money, employee chooses a plan below the top PPO Results 2015 Total costs projected 4% below 2014 48% drop in average payroll deduction - $900 /employee
Healthcare Benefit Insights Interest in private exchanges remains strong 47% have implemented or are considering implementing a private exchange by 2018 In considering a private exchange, employers say the consumer experience matters 96% say experience and track record are key consideration when choosing exchange vendor 85% of 2014 respondents said it is very important that the exchange offers sound support in decision making (Private Exchange Evaluation Collaborative 2014 Employer Study)
Healthcare Benefit Insights Source Private Exchange: Accenture analysis, based on data from; U.S. Census, Bureau of Labor Statistics, Kaiser Employer Health Benefits 2012 Annual Survey.
Questions? www.agc.org/exchange 1-800-210-5290