redefining
REDEFINING
Health Benefits for Employers & Employees
Case Studies from Bloom Health JUNE 2011
Introduction The employee health benefit landscape is evolving at a rapid pace, and employers are struggling to keep up with a system that is getting more expensive and complicated every day. In light of increasing costs and upcoming health care reform changes, employers of all sizes are grappling with big decisions over how to continue to offer health benefits to their employees. Recent research has underscored that change is coming due to a variety of factors, including health care reform. A study by Mercer found that 10 percent of employers will drop health care coverage in 2014 when their employees have the option to buy it themselves through new, state-run insurance exchanges1. Meanwhile, other studies show that many employers will start offering health benefits for the first time in 20142, 3. Managing health benefit costs will become increasingly complicated over the next three years as employers focus on remaining both compliant and competitive. As the health insurance market shifts, employers would be unwise to neglect employer sponsored benefits. In fact, a recent survey by Unum and Harvard Business Review Analytic Services revealed that it is attractive benefit packages — not high salaries — that recruit and retain good employees4. Data has also shown that consumers want to be in the driver’s seat when it comes to their health5, validated by the purchasing decision of Bloom Health members, who have heavily leaned toward high-deductible health plans and health savings accounts. So, the question at hand is: How are employers supposed to take care of their business, while at the same time taking care of their people? The answer is to look to new models that are revolutionizing health benefits, like Defined Contribution. Defined Contribution enables an employer to determine exactly how much it can budget to spend on employee health benefits and from there, set aside a pre-determined amount of money for each employee. Far from the one-size-fits-all approach that dominates the employer market today, employees are empowered to use the allocated funds to shop for the health insurance plans, benefits and services that best meet their individual needs. Bloom Health is a company that is pioneering this approach, and responsibly reining in costs while doing so. Bloom Health clients are effectively managing and controlling the growth of their health care spending, while providing employees with flexibility and customized options. The following case studies showcase how Bloom Health worked with three employers to better predict their benefit costs and open the door to individual health insurance through a defined contribution approach.
Mercer. National Survey of Employer-Sponsored Health Plans. Survey. 2010.
1
Garrett B, Buettgen M. Employer-Sponsored Insurance under Health Reform: Reports of Its Demise Are Premature. Robert Wood Johnson Foundation. 2011. 2
Eibner C, Hussey, P, Girosi F. The Effects of the Affordable Care Act on Workers’ Health Insurance Coverage. New England Journal of Medicine. 2010. 3
Unum. Who Will Build Your Future? The New Employee Relationship. Harvard Business Review. 2011.
4
Bloom Health.
5
Our Process for Helping Employers and Employees Manage Health Care Spending 1
We partner with employers to determine a reasonable yet affordable amount to spend on health insurance.
2
Employers deposit pre-tax dollars on behalf of each employee into a Bloom Account. Optional Program Dollars are used for purchasing wellness programs like nutrition counseling or smoking cessation resources.
Insurance Dollars
$3,000.
00
+
Program Dollars
$100.
00
=
Bloom Account Balance
$3,100.00
3
Employees take the Bloom Survey, a comprehensive, intelligent and friendly health, risk and financial assessment that identifies appropriate health plans and services. It’s easy, fast and accurate.
4
Our own recommendation engine quickly generates tailored insurance plan options for each employee and displays them through our online marketplace — the Virtual Shelf™.
5
An employee can do all this either over the phone with a Bloom Advisor, a licensed insurance expert, or online. Based on employee preferences, Bloom can also recommend other helpful health and wellness services from the product marketplace.
6
Employees select a health plan and pay for insurance and other services directly from their Bloom Account, with Bloom Health administering the entire transaction.
7
Employees use the remaining dollars in their Bloom Account to pay for health services throughout the year. Any money they don’t spend rolls over to the following year.
Case Study 1: Orion Corporation of Minnesota
How Do We Keep Up with Rising Health Benefit Costs? Orion Corporation of Minnesota employs approximately 75 benefit-eligible, full-time employees. As benefit costs rose exponentially over the years, Orion began switching health plan offerings — from a traditional HMO to a high-deductable plan with a Health Savings
About Orion: »P rovider of residential services and support for the disabled »O perates in Saint Paul and Grand Rapids, Minnesota »1 20 employees total
Account (HSA) component — in an effort to control spending without dropping coverage. Unfortunately, it wasn’t working and Orion was facing an upcoming 40 percent increase in premiums when they decided in May 2010 to get in touch with Bloom Health. Reining In Costs Responsibly Orion remained committed to providing quality employee health benefits, when they sat down with Bloom Health and started talking about Defined Contribution as a way to responsibly rein in costs. To start the Defined Contribution strategy planning, Bloom Health worked with Orion
“With Bloom Health, our employees were able to buy a comparable or better product. They were going to be able to stay within budget and meet their needs.” Mike Sarafolean President Orion Corporation of Minnesota
to define age bands across their employee population, whose ages ranged from 20 to 60 years old. Bloom Health helped Orion understand the costs in their marketplace in order for them to determine a contribution amount for each group (e.g., $125 per month for employees under 40 years old). By mid-July of 2010, Orion announced the new plan to employees and Bloom Health immediately began working with employees individually and online to recommend the best health insurance plans and services based on their individual needs. Everyone was able to select their own benefits from a variety of coverage options based on Orion’s individual contributions, and just two months later each employee was covered under their new individual health insurance plan. Look Who’s Driving Now Through its work with Bloom Health, Orion has not only been able to control its health care spending, but has also satisfied employees by providing them with more coverage options. By putting Orion employees in the driver’s seat, the personalized benefit selection process allowed them to choose what’s most important to them — whether it’s lower out of pocket costs or additional coverage. While some employees preferred the former, other chose the latter. This is part of the appeal of the Bloom Health Defined Contribution approach. Orion plans to continue with its current contributions in the coming year in order to control spend, and Bloom Health’s structure will allow employees to make individual adjustments or changes. Moving forward, Orion will evaluate when and where it needs to make changes to its contributions.
Case Study 2: Viking Accoustical Corporation
Is This the End of Our Health Benefits? For years, Viking Acoustical Corporation was self-insured with stop loss insurance and found itself with annual double digit increases in health care costs. The switch to a high-deductible, HMO-only plan brought brief refuge, but history soon repeated itself. Meanwhile, Viking management realized that employees were largely unaware of the company’s struggle with
About Viking:
ballooning costs and began grappling with the possibility that it may need to drop benefits
»M anufacturers of ergonomic office furniture
options all together.
»B ased in Lakeville, MN »5 0 employees total
Empowering Employees Viking appreciated that Bloom Health could not only address costs, but engage employees by involving them in the process of choosing health plans. At the end of 2010, Viking decided to work with Bloom Health to create a Defined Contribution plan for singles and families,
“Our employees like how they can go online and can cater a plan to themselves. They have the opportunity to pay for something that’s even better than what they had before.
through which they paid between $75 and $135 a month for singles and $275 and $350 a month for families. Bloom Health’s advisor team of licensed insurance experts then worked individually with Viking employees to guide them step-by step through the process of choosing how to spend their health benefits dollars. Viking found that the process provided employees with a greater appreciation for shopping for health care. Plus, Bloom’s online recommendations engine and advisor team provided less savvy consumers with all the help
They can see health risks in
they needed, taking the burden off of the small HR team. According to CEO Bret
real dollars or in terms of what
Starkweather, “Now that they’re in charge of making the decisions, our employees are paying
it will cost them individually as
attention to the benefits and their health.”
opposed to being part of a group.” Bret Starkweather CEO
Back in the Game Viking management now enjoys being removed from the role as “health care agent” and appreciates that they are no longer stuck between the human resource department and employees on health care coverage decisions. Most importantly, with Bloom Health, Viking is happy to have found an affordable alternative to dropping coverage.
Case Study 3: Refactr
Health Benefits? How Are We refactr Supposed to Afford THAT? As a young company with only a handful of full-time employees, Refactr’s small group plan
refactr About Refactr: »W eb-based software development company »B ased in Minneapolis, Minnesota »9 employees total
wasn’t scalable so to remain competitive when the company began to expand in 2010, Refactr decided it had to find a way to offer a different health benefit as several employees moved from contract work to full-time employment. Cost Predictability Initially, Refactr hadn’t considered a Defined Contribution approach. In fact, they hadn’t even heard of it. However, upon learning about Bloom Health and its unique offering, the founders reached out to Bloom to learn more about what the new benefit model had to offer for their small business. Refactr found the ability to set its contribution amounts most appealing, because it meant its costs were fixed and wouldn’t fluctuate based on utilization or health
“What caught our attention was the ability to offer health benefits to our employees
status. Refactr was comfortable and confident offering Bloom Health’s product to its employees, as it
regardless of their health
gave its full-time employees the opportunity to select the plan that best met their needs.
history. With our previous
Recognizing that a group plan would have been much more cumbersome and potentially
small group plan, there was
expensive, Refactr was pleased with the ease of administration and the ability to offer choices
the fear that it would blow
to meet employees’ individual needs.
up in costs if something happened to one of our
First-Time Health Benefiters
employees or if someone had
Refactr is pleased to be providing health benefits to its employees thanks to Bloom Health.
a pre-existing condition. We
Through Bloom Health’s Defined Contribution approach and recommendations engine, the
were attracted to the idea of
company is able to maintain their competitive edge in the marketplace, while maintaining and
being able to both maintain and project future costs.” Ben Edwards Co-Founder Refactr
projecting future costs. Refactr plans to continue working with Bloom Health to keep an eye on coverage plan costs and will consider increasing its contributions as necessary in the coming years.
Conclusion Over the next three years, employee benefits will continue to bring challenges to both employers and employees, primarily due to the rising costs of health care. However, there is an alternative to rising health care costs, dropping coverage and paying a penalty. That alternative is provided by Bloom Health, who is redefining the model for employer-sponsored health benefits—and reining in costs while doing so. The three companies featured worked with Bloom Health to begin a defined contribution approach to health benefits and was able to offer a new world of individual health insurance to their employees. Companies using the Bloom Health solution are able to slow healthcare spending growth. Companies previously unable to provide benefits are now able to do so. Providing a new customer experience, Bloom Health empowers employees to make better choices and take control of their health care.
Bloom Health · 10 S. 5th Street, Suite 645 Minneapolis, MN 55402 Phone: 612-367-8100 http://www.gobloomhealth.com [email protected]
Health Benefits for Employers & Employees
Case Studies from Bloom Health JUNE 2011
Introduction The employee health benefit landscape is evolving at a rapid pace, and employers are struggling to keep up with a system that is getting more expensive and complicated every day. In light of increasing costs and upcoming health care reform changes, employers of all sizes are grappling with big decisions over how to continue to offer health benefits to their employees. Recent research has underscored that change is coming due to a variety of factors, including health care reform. A study by Mercer found that 10 percent of employers will drop health care coverage in 2014 when their employees have the option to buy it themselves through new, state-run insurance exchanges1. Meanwhile, other studies show that many employers will start offering health benefits for the first time in 20142, 3. Managing health benefit costs will become increasingly complicated over the next three years as employers focus on remaining both compliant and competitive. As the health insurance market shifts, employers would be unwise to neglect employer sponsored benefits. In fact, a recent survey by Unum and Harvard Business Review Analytic Services revealed that it is attractive benefit packages — not high salaries — that recruit and retain good employees4. Data has also shown that consumers want to be in the driver’s seat when it comes to their health5, validated by the purchasing decision of Bloom Health members, who have heavily leaned toward high-deductible health plans and health savings accounts. So, the question at hand is: How are employers supposed to take care of their business, while at the same time taking care of their people? The answer is to look to new models that are revolutionizing health benefits, like Defined Contribution. Defined Contribution enables an employer to determine exactly how much it can budget to spend on employee health benefits and from there, set aside a pre-determined amount of money for each employee. Far from the one-size-fits-all approach that dominates the employer market today, employees are empowered to use the allocated funds to shop for the health insurance plans, benefits and services that best meet their individual needs. Bloom Health is a company that is pioneering this approach, and responsibly reining in costs while doing so. Bloom Health clients are effectively managing and controlling the growth of their health care spending, while providing employees with flexibility and customized options. The following case studies showcase how Bloom Health worked with three employers to better predict their benefit costs and open the door to individual health insurance through a defined contribution approach.
Mercer. National Survey of Employer-Sponsored Health Plans. Survey. 2010.
1
Garrett B, Buettgen M. Employer-Sponsored Insurance under Health Reform: Reports of Its Demise Are Premature. Robert Wood Johnson Foundation. 2011. 2
Eibner C, Hussey, P, Girosi F. The Effects of the Affordable Care Act on Workers’ Health Insurance Coverage. New England Journal of Medicine. 2010. 3
Unum. Who Will Build Your Future? The New Employee Relationship. Harvard Business Review. 2011.
4
Bloom Health.
5
Our Process for Helping Employers and Employees Manage Health Care Spending 1
We partner with employers to determine a reasonable yet affordable amount to spend on health insurance.
2
Employers deposit pre-tax dollars on behalf of each employee into a Bloom Account. Optional Program Dollars are used for purchasing wellness programs like nutrition counseling or smoking cessation resources.
Insurance Dollars
$3,000.
00
+
Program Dollars
$100.
00
=
Bloom Account Balance
$3,100.00
3
Employees take the Bloom Survey, a comprehensive, intelligent and friendly health, risk and financial assessment that identifies appropriate health plans and services. It’s easy, fast and accurate.
4
Our own recommendation engine quickly generates tailored insurance plan options for each employee and displays them through our online marketplace — the Virtual Shelf™.
5
An employee can do all this either over the phone with a Bloom Advisor, a licensed insurance expert, or online. Based on employee preferences, Bloom can also recommend other helpful health and wellness services from the product marketplace.
6
Employees select a health plan and pay for insurance and other services directly from their Bloom Account, with Bloom Health administering the entire transaction.
7
Employees use the remaining dollars in their Bloom Account to pay for health services throughout the year. Any money they don’t spend rolls over to the following year.
Case Study 1: Orion Corporation of Minnesota
How Do We Keep Up with Rising Health Benefit Costs? Orion Corporation of Minnesota employs approximately 75 benefit-eligible, full-time employees. As benefit costs rose exponentially over the years, Orion began switching health plan offerings — from a traditional HMO to a high-deductable plan with a Health Savings
About Orion: »P rovider of residential services and support for the disabled »O perates in Saint Paul and Grand Rapids, Minnesota »1 20 employees total
Account (HSA) component — in an effort to control spending without dropping coverage. Unfortunately, it wasn’t working and Orion was facing an upcoming 40 percent increase in premiums when they decided in May 2010 to get in touch with Bloom Health. Reining In Costs Responsibly Orion remained committed to providing quality employee health benefits, when they sat down with Bloom Health and started talking about Defined Contribution as a way to responsibly rein in costs. To start the Defined Contribution strategy planning, Bloom Health worked with Orion
“With Bloom Health, our employees were able to buy a comparable or better product. They were going to be able to stay within budget and meet their needs.” Mike Sarafolean President Orion Corporation of Minnesota
to define age bands across their employee population, whose ages ranged from 20 to 60 years old. Bloom Health helped Orion understand the costs in their marketplace in order for them to determine a contribution amount for each group (e.g., $125 per month for employees under 40 years old). By mid-July of 2010, Orion announced the new plan to employees and Bloom Health immediately began working with employees individually and online to recommend the best health insurance plans and services based on their individual needs. Everyone was able to select their own benefits from a variety of coverage options based on Orion’s individual contributions, and just two months later each employee was covered under their new individual health insurance plan. Look Who’s Driving Now Through its work with Bloom Health, Orion has not only been able to control its health care spending, but has also satisfied employees by providing them with more coverage options. By putting Orion employees in the driver’s seat, the personalized benefit selection process allowed them to choose what’s most important to them — whether it’s lower out of pocket costs or additional coverage. While some employees preferred the former, other chose the latter. This is part of the appeal of the Bloom Health Defined Contribution approach. Orion plans to continue with its current contributions in the coming year in order to control spend, and Bloom Health’s structure will allow employees to make individual adjustments or changes. Moving forward, Orion will evaluate when and where it needs to make changes to its contributions.
Case Study 2: Viking Accoustical Corporation
Is This the End of Our Health Benefits? For years, Viking Acoustical Corporation was self-insured with stop loss insurance and found itself with annual double digit increases in health care costs. The switch to a high-deductible, HMO-only plan brought brief refuge, but history soon repeated itself. Meanwhile, Viking management realized that employees were largely unaware of the company’s struggle with
About Viking:
ballooning costs and began grappling with the possibility that it may need to drop benefits
»M anufacturers of ergonomic office furniture
options all together.
»B ased in Lakeville, MN »5 0 employees total
Empowering Employees Viking appreciated that Bloom Health could not only address costs, but engage employees by involving them in the process of choosing health plans. At the end of 2010, Viking decided to work with Bloom Health to create a Defined Contribution plan for singles and families,
“Our employees like how they can go online and can cater a plan to themselves. They have the opportunity to pay for something that’s even better than what they had before.
through which they paid between $75 and $135 a month for singles and $275 and $350 a month for families. Bloom Health’s advisor team of licensed insurance experts then worked individually with Viking employees to guide them step-by step through the process of choosing how to spend their health benefits dollars. Viking found that the process provided employees with a greater appreciation for shopping for health care. Plus, Bloom’s online recommendations engine and advisor team provided less savvy consumers with all the help
They can see health risks in
they needed, taking the burden off of the small HR team. According to CEO Bret
real dollars or in terms of what
Starkweather, “Now that they’re in charge of making the decisions, our employees are paying
it will cost them individually as
attention to the benefits and their health.”
opposed to being part of a group.” Bret Starkweather CEO
Back in the Game Viking management now enjoys being removed from the role as “health care agent” and appreciates that they are no longer stuck between the human resource department and employees on health care coverage decisions. Most importantly, with Bloom Health, Viking is happy to have found an affordable alternative to dropping coverage.
Case Study 3: Refactr
Health Benefits? How Are We refactr Supposed to Afford THAT? As a young company with only a handful of full-time employees, Refactr’s small group plan
refactr About Refactr: »W eb-based software development company »B ased in Minneapolis, Minnesota »9 employees total
wasn’t scalable so to remain competitive when the company began to expand in 2010, Refactr decided it had to find a way to offer a different health benefit as several employees moved from contract work to full-time employment. Cost Predictability Initially, Refactr hadn’t considered a Defined Contribution approach. In fact, they hadn’t even heard of it. However, upon learning about Bloom Health and its unique offering, the founders reached out to Bloom to learn more about what the new benefit model had to offer for their small business. Refactr found the ability to set its contribution amounts most appealing, because it meant its costs were fixed and wouldn’t fluctuate based on utilization or health
“What caught our attention was the ability to offer health benefits to our employees
status. Refactr was comfortable and confident offering Bloom Health’s product to its employees, as it
regardless of their health
gave its full-time employees the opportunity to select the plan that best met their needs.
history. With our previous
Recognizing that a group plan would have been much more cumbersome and potentially
small group plan, there was
expensive, Refactr was pleased with the ease of administration and the ability to offer choices
the fear that it would blow
to meet employees’ individual needs.
up in costs if something happened to one of our
First-Time Health Benefiters
employees or if someone had
Refactr is pleased to be providing health benefits to its employees thanks to Bloom Health.
a pre-existing condition. We
Through Bloom Health’s Defined Contribution approach and recommendations engine, the
were attracted to the idea of
company is able to maintain their competitive edge in the marketplace, while maintaining and
being able to both maintain and project future costs.” Ben Edwards Co-Founder Refactr
projecting future costs. Refactr plans to continue working with Bloom Health to keep an eye on coverage plan costs and will consider increasing its contributions as necessary in the coming years.
Conclusion Over the next three years, employee benefits will continue to bring challenges to both employers and employees, primarily due to the rising costs of health care. However, there is an alternative to rising health care costs, dropping coverage and paying a penalty. That alternative is provided by Bloom Health, who is redefining the model for employer-sponsored health benefits—and reining in costs while doing so. The three companies featured worked with Bloom Health to begin a defined contribution approach to health benefits and was able to offer a new world of individual health insurance to their employees. Companies using the Bloom Health solution are able to slow healthcare spending growth. Companies previously unable to provide benefits are now able to do so. Providing a new customer experience, Bloom Health empowers employees to make better choices and take control of their health care.
Bloom Health · 10 S. 5th Street, Suite 645 Minneapolis, MN 55402 Phone: 612-367-8100 http://www.gobloomhealth.com [email protected]
