It is in the best interest of both employees and the employer to contain medical plan costs. The employer must balance the quality (that is, the reimbursement level) of the plan against available funds. But employees need to see their participation as a kind of partnership with the employer. They should try to maintain a healthy lifestyle. We know the reality of overeating, smoking, drug use, etc. But the employer dissolves all this negativity into the maximum cost that can be borne by the company. Any amount above the employer’s resource limit will be provided by the employees.
If the employee and family members do their part, the employer has two cost control options: COST TRANSFER AND COST AVOIDANCE. Cost is transferred when the employee pays medical plan deductibles, co-payments or has contributions taken from his/her paycheck. Health Spending Accounts are another way to transfer cost away from the employer. Sometimes when a spouse participates in a medical plan of another employer, benefit payments are co-ordinated. This means that two plans will split the cost of the medical care.
Cost is avoided when the medical plan has mechanisms in place that review recommended expensive medical care BEFORE it is provided. Examples are pre-certification for all non-emergency hospital admissions, second opinions for all surgeries, disease management programs that address serious long term care episodes, etc. The key here is to minimize or eliminate the cost of care before any expense is actually incurred without adversely impacting the quality of care.
The employer’s resource pie is just so big. If costs escalate the employer will need to raise the cost of his/her products/services. Many times this jeopardizes the ability to compete and ultimately can threaten the long term (or short term) prospects for company survival. Learn your plan’s design, follow its procedures; best and most importantly live a long and healthy life. As you age you’ll find that poor health decisions made when you were younger limit remedies at advanced ages and drastically impact your quality of life. NEXT TIME: NATIONAL HEALTH PLANS AROUND THE GLOBE
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