Unbundling Health Claims (Benefit Tips ® - © 2002)
The drug, dental, vision and paramedical benefits that employees appreciate so much typically represent two-thirds of employee benefit costs. Even though these claim payments are relatively small and predictable, many employers use expensive and cumbersome insurance schemes to deliver these benefits to their staff.
For the past decade, claims-paying service firms have made it easy for you to reduce the cost of health benefits by providing these benefits without an insurance contract. These firms provide the same point-of-purchase benefit cards, real-time claim settlement and electronic deposits to employee bank accounts that are available through insurance companies.
Dealing directly with a claims-paying service firm is simple and inexpensive compared to dealing with an insurance company. You simply pay for the claims processed during the month without worrying about claims reserves, risk charges and rate increases based on projected inflation.
You can cut the mark-up on your health benefits in half by accepting the monthly cash-flow fluctuation of employee health claims. Some claims-paying service firms even offer a fixed dollar amount transaction fee as opposed to a percentage of paid claims. This avoids the inflation creep that otherwise occurs with administration charges.