McGraw Wentworth Mid-Market Group Benefits Survey Results Show Eligibility Management is Leading Cost Saving Strategy for Michigan Employers
"TrendBenders(TM) are the high-performing organizations that areproactively managing their employee benefits and for 2007-2008 achieved anaverage annual increase of two percent or less," said Rebecca McLaughlan,managing director, McGraw Wentworth. "TrendBenders(TM) are in the top quartileof the survey participants. They tend to have higher deductibles and co-pays,a higher rate of employees selecting consumer driven health plans, and anemphasis on wellness."
When asked to rank their cost control strategies, TrendBenders (TM) andsurvey participants in total cited eligibility management strategies as threeof their top five strategies. Employers are conducting audits to confirm theeligibility of a spouse or child and requiring documentation such as amarriage and birth certificates for mid-year status changes. If an employeehas a dependent that is a full-time college student, the parent may be askedto present a college transcript. In instances where a spouse is offeredcoverage by his/her employer, some employers have implemented a spousalsurcharge while others have opted not to allow spousal coverage forindividuals eligible for coverage under another employer's plan. Employersthat effectively manage eligibility can directly impact their benefit costs byminimizing the number of ineligible dependents they cover. The savings toemployers from an eligibility audit can be significant according toMcLaughlan.
Survey participants identified the most effective cost control strategiesas:
"At the end of the day, despite these measures to control costs, employersin southeast Michigan continue to provide employee benefits at a higher costthan we see nationally," said Karen Alter, account director, McGraw Wentworthand survey leader. "Locally, health benefit plan increases were at 7% afterplan changes while nationally they remain at 6.1% for the third straight year.This trend continues in spite of Michigan's weak economy."
The survey analysis also provides a Total Cost Ratio comparing whatMichigan employers and employees pay in total for benefits in 2008 includingpremiums, employee payroll contributions and out of pocket costs.Specifically, the Total Cost Ratio in 2004 for a median PPO Plan for anindividual was $382 per month of which the employer paid 67% or $255 and theemployee paid 33% or $127 in payroll deduction ($57) and deductibles and co-pays ($70). In 2008, the median plan Total Cost Ratio is $504 per month ofwhich the employer is paying 61% or $309 and the employee is paying 39% or$195 in payroll deduction ($92) and deductibles and co-pays ($103).
"In comparing 2004 and 2008 costs, employers and employees are definitelyseeing higher dollar costs, but there is also an increase in employee cost-sharing," said Alter. "Employers are now building in incentives to directemployees to the right place for the right care such as increasing co-pays foremergency room care versus lower co-pays for office visits."
Survey respondents represent diverse industries including manufa
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