“It was my understanding that there would be no math”
Posted on October 11th, 2017
“It was my understanding that there would be no math.” In 1976, Chevy Chase said this line while playing Gerald Ford in a Saturday Night Live skit. Since then, the line has been used in a number of movies. And 41 years later, if we’re being honest, most people probably think this in their daily lives.
For me as a math nerd, I love the fact that numbers are a part of what we do every day in the Insurance industry. And math is certainly our friend in 2017. Whether it’s shifting the risk to the employer by putting in a self-funded plan or implementing an HRA, or if it’s shifting the risk to the employees by raising the deductible and out-of-pocket and implementing a Gap plan, we better have the “understanding” that there will be math.
What I’ve found particularly useful this year is the inclusion of Gap plans paired with fully insured Major Medical plans. The stars are currently aligned for these types of plans due to a few internal and external factors.
First the internal factor: We are finally at a place where gap plans aren’t left with a ton of holes in the plans. This was always the biggest obstacle to overcome! You can now find plans that will fill in an entire exposure “bucket,” whether it is due to Inpatient or Outpatient expenses. This is huge considering there have been plans in the past that only paid Outpatient benefits at a small percentage of the Inpatient reimbursement level. This ranged from 4 percent to 80 percent of the Inpatient level.
The two main external factors for the gap carriers were renewals and rate spreads. In recent years, most fully insured Major Medical renewals weren’t large percentage increases. So the “path of least resistance” philosophy came in to play, and the group remained on the plan they had previously. Also, we weren’t seeing a huge spread by raising the deductible and out-of-pocket for the member. So why jump from a $1,500 deductible to a $4,000 deductible if the premium increase was minimal?
In 2017, it’s not uncommon to see a 14 percent savings off of the renewal by implementing a gap plan. And with premiums on the rise, 14 percent of a large number is a large number!
Need more information on Gap plans? Contact your Cason Group Worksite Sales Representative.