Hybrid Group Insurance Plan
Best for groups of 5 to 25
While the Traditional Insurance plan has served well for the last century or so, we are entering a period of time never before experienced. The aging baby boomer generation, new blockbuster drugs and decreasing government benefits have all resulted in double-digit increases to health care costs. At the current rate of increase in health care costs, premiums for a benefits plan can double every 4-5 years. The financial pressure this has placed on employers has resulted in a new style of benefit plan which takes advantage of the best qualities of both the Health and Welfare Trust and Traditional Insured Plans.
Health and Welfare Trusts are less costly to administrate than a traditional plan, however they lack the protection provided by an insured plan.
Traditional Insured Plans offer excellent protection, however their cost and renewals dictated by the insurance company often mean an employer feels trapped paying his premiums.
The key to a Hybrid plan is to “pay for the predictable, buy insurance for the unpredictable”. Most claims made in a traditional insured plan are small dollar claims, prescription drugs, dentists cleanings, or chiropractor visits. None of these claims on their own will be catastrophic to the company. It is the unexpected claims such as Cancer, Heart Attacks, or high cost prescription drugs that can bankrupt a plan.
Hybrid plans use a Health and Welfare Trust to fund the predictable claims up to a certain maximum. Once this maximum is reached claims are paid by a traditional insurance plan. In effect the Health and Welfare Trust becomes a large deductible for the insured plan. A high deductible means lower insurance premiums. A hybrid plan allows for a potential refund if claims are low, and a predictable low cost insurance premium.
Hybrid plans are not for everyone, they do have their own downsides such as increased complexity, added administration, a limited number of providers, and the potential for higher cost if aggregate claims are high.
For more information on Hybrid plans, and to see if they would be right for your organization please contact us or call now: 1-888-592-4614. In Victoria call us: (250) 592-4614