coventry flexchoice. a 21st century health coverage strategy from the health plans of coventry...

Coventry FlexChoiceCoventry FlexChoice. .

A 21st century health coverage A 21st century health coverage strategystrategy from the health plans of Coventry Health from the health plans of Coventry Health Care.Care.

When it comes to providing health care coverage to their employees, employers everywhere are challenged.

Two key trends have added to the challenge.



1. Over two-thirds of employers do not have a strategic plan for their health care program.

Source: 2004 Future Health Care Expectations survey of 622 large employers representing over 7,000 employees. Hewitt Associates LLC.

Either you have a strategic plan for your company’s health care program, or you have a strategic plan to fail.



2. For years, as benefit plans became richer, employees were actually asked to pay less and less out of their own pockets for health care.




A health care coverage A health care coverage strategystrategy from the health plans of Coventry Health Care. from the health plans of Coventry Health Care.

Over time, employees have paid a smaller share of total health care costs:

In 1960: Employers had few health coverage carriers from which to choose. “Traditional indemnity” coverage was the available product. The percent of total health care costs paid out of pocket (i.e. by covered employees) exceeded 50%.

By 1980: Employers had more health coverage carriers from which to choose, as health maintenance organizations began to proliferate. The percent of total health costs paid out of pocket continued a steady downward trend (to approximately 30%).

Through the end of the 20th Century: The insulation of individual consumers from the true costs of health care continued to spread, as the total percent paid out of pocket for services fell below 20%. By now, most people had no idea what health care services cost (and some folks became convinced that doctor office visits cost $5.00).

Statistic sources: Greg Scandlen, National Center for Policy Analysis… HIU; and Uwe Reinhardt, Princeton economist





Now, push has come to shove.

In the 21st Century:

Exasperated employers have begun to realize they can do one of two things when it comes to continuing rising health care costs.

They can feel sorry

for themselves ...

or they can institute

a strategy.

Copyright: New Line Productions, Inc. 2002



Introducing:

A health coverage strategy

for exasperated employers.

From The Leader With The Torch.



Our Operating Assumptions:•Employers need to make fact-based decisions, and develop strategies for their company’s health care coverage.

•Employers need to educate their employees about the realities of health care costs, and better engage them in a fair share of the costs of their benefit plan.

•One-size-fits-all solutions do not exist. Different companies will have different needs / levels of tolerance / make-ups to consider in developing a long-term strategy.

•You need to keep it simple.

Coventry Health Care companies have been offering Consumer Driven plans since March, 2001. We are experienced in every aspect of designing and implementing plans that provide the proper incentives to your employees.



Our experience has shown that keeping it simple is crucial to the success of any Consumer Driven Health Care plan.

The Coventry FlexChoice strategy consists of some straightforward steps for employers of all sizes.



Step One:

Select a high deductible plan that best fits your savings goals, culture, and employee benefits philosophy. The health plans of Coventry Health Care have been ahead of the curve in implementing products that better engage consumers in the purchase of health care. We benefit from the ability to share “best practices” across markets in product development, and centralized administration. Coventry’s health plans now administer three times more base medical plans than we did in October, 2001. The majority of our newest plans feature higher copayments and/or deductibles.



Step Two:

Consider adding a self-funded Health Reimbursement Arrangement (HRA) as part of your total benefit program.

To help ensure seamless administration, Coventry has integrated our enrollment systems and implementation process with our chosen vendor, MHM Resources, Inc. (MHM). Employers can elect to have their enrollment data sent directly to MHM … eliminating the need to have to “sync” eligibility of the two plans manually.



By offering a self-funded HRA with maximum funding, you can:

- Give your employees more choices in how they spend their benefit dollar.

- Allow your employees to save for the future (since unspent HRA dollars rollover for future use)



Alternative HRA TypesBridge programs provide a “bridge” between out-of-pocket expenses and insurance coverage.

Comprehensive programs pay all (*) medical expenses not covered by insurance. An employer can exclude specific benefits in designing plan (e.g. LASIK or orthodontia). (* IRC Section 213-eligible)

Limited programs cover only a limited group of expenses (e.g. vision, dental, etc.). Limited programs can also be restricted to a single medical expense, such as prescription drugs.

Insurance Only programs allow employees to pay for employer-provided insurance coverage or individually owned policies for health, disability or long-term care insurance.



Bridge

Our recommended HRA Type is a Bridge Program



You determine:

- When HRA funds are available to employees

- Limits on the funds that rollover each year

- Disposition of funds when employees are terminated or retire

- Payment method.

This flexibility helps ensure there is a plan design that works for you and your employees.





HRA Payment Methods

Paper Claims Submission

Debit Card

Electronic (our recommended approach)

Through paperless, electronic capability, the HRA vendor is fed a claims file. Processing against that employee’s HRA benefit levels occurs automatically.



When you offer an HRA, you can also establish - at no additional cost - a coordinated Medical and Dependent Care 125 Flexible Spending Account (FSA) for all of your employees.

An FSA is fully funded by the employee on a pre-tax basis, allowing employees to pay less out-of-pocket for medical services not covered by the HRA or the major medical plan. A coordinated FSA can be a critical component to employee acceptance. It gives your employees even more options as to how they manage and finance their health care.



Step Three:

Work with Coventry to develop a communication plan to maximize enrollment and reduce employee concerns.



We’ve organized our website, www.cvty.com, to help facilitate communications.



Easily accessible information and tools are available through our website, including:

- An overview of the Coventry Flex Choice strategy;

- Additional information on HRA programs and plan design options;

- An overview of MHM Resources;

- Coventry Cost Calculators (to help both employers and employees in the decision making / budgeting process);

- Health information to further help create educated consumers;

- Frequently Asked Questions;

- How to get started;

- and more!



Coventry has also been ahead of the curve in collecting and disseminating information that you can use to help educate your employees.



Our Coventry Cost CalculatorsSM help facilitate decision making on the part of both employers and employees.



Coventry Cost CalculatorsSM are designed to easily show the impacts of various plan design choices.

Our proprietary tools to show any employer the impact of various offering scenarios, based on different combinations of base medical plans and accompanying HRAs. Employers can test different choices in products offered, coinsurance required of employees, and contribution levels.

And, we’ve posted on our website a second Cost Calculator to help employees make decisions best for them.



The Coventry Advantage:

Full functionality! We are already administering “low option” benefit plans. We’ve established the “behind-the-scenes” infrastructure with our preferred HRA vendor. We’ve developed Coventry Cost CalculatorsSM for the budgeting purposes of both employers and employees. And, we’ve tied it all together through our leading website.

coventry flexchoice. a 21st century health coverage strategy from the health plans of coventry...

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