Designing Your Benefits Plans: Cover the Kids
When Hillary Clinton came up with HillaryCare in the 90’s and when President Obama drafted Obamacare, they both had the same message: “We have to get the good risks (healthy people) to buy insurance”. Employer’s need to have the same mentality.
Bear with me here as it’s about to get a little technical…as employers insure more employees, their premiums become based more and more on their actual claims experience. This is called credibility. If your health plan is heavily weighted on claims experience, it’s going to make sense for you to try and bring the young healthy kids into your plan.
Great in theory, so how do you do that?…by incentivizing it! Universally, kids are the lowest cost to cover on your plan, while spouses are traditionally the most expensive to cover on your plan. We want to design the employee contributions so that it’s expensive to place spouses on the plan, but affordable to place kids on the plan.
This will help reduce your long-term trend and improve the overall performance of your health plan. Should you decide to self-insure, you will capture even more value for reasons that are discussed here.