Consumer-Directed Care

Featured Health Business Daily Story November 8, 2007

Humana's New Consumer-Directed Product Limits Employer Risk by Capping Annual Rate Increases for Three Years

Reprinted fromINSIDE CONSUMER-DIRECTED CARE, a biweekly newsletter with timely news and insightful analysis of benefit design, contracts, market strategies and financial results.

Small businesses reluctant to try a CDH plan could find some comfort in Humana's new No Worry product. The insurer says the new program eases employers into a CDH product over three years and caps annual rate increases during that period. One employer client that spoke with ICDC has used the money it saved in lower premiums to fund employee-owned HSAs.

Ken Neyer Plumbing, Inc. in Cincinnati had several employee benefits meetings with insurance broker Jason Suchanek before it signed up for the No Worry program, Suchanek says.

"This is a big change," he explains. But "it's knowing what…the rates are going to be, and [seeing] that you are making a good decision for the next three years." The company now knows what its rates are going to be through 2010, says Suchanek, who is with The Scheller Bradford Group.

"For an employer to come to Humana knowing what they'll pay for health care [coverage] over the next three years, they can budget and plan much more effectively," says Humana spokesperson Jim Turner.

Humana says its No Worry program lets employers choose from a number of packages that include three products. For example:

• Year 1: a PPO with $60 coinsurance ($90 for families), a $500 deductible and $2,000 out-of-pocket maximum;
  
  
• Year 2: Humana's CoverageFirst with a personal care account, $70 coinsurance ($100 for family coverage), a $1,000 deductible and no out-of-pocket maximum;
  
  
• Year 3(A): CoverageFirst with a $2,000 deductible; or
  
  
• Year 3(B): an HSA-qualified high-deductible health plan (HDHP) with $70 coinsurance ($100 for family coverage) and a $2,500 deductible.

Humana says it guarantees clients that the annual rate increase will not exceed 6% in the second and third years if the employer provides three-fourths of its employees' phone numbers and e-mail addresses. That rate guarantee drops to as low as 4.5% if the employer provides 90% of the contact information. Employees must also complete a health risk assessment.

"We're working to enable our members to become savvier health care consumers. And education is a key," Turner explains. Humana uses the contact information to "work directly with employees when we need to, say, enroll them in a disease-management program, or make them aware of some of the wellness programs we have available," he adds.

Turner says small employers often seem reluctant to jump into an HDHP. "Employers are uncomfortable converting from their current offering to an HDHP without taking the time necessary to properly educate their employees. That's one of the reasons No Worry is a three-year program — there's time for the journey from a more traditional plan offering in the first year to a CDH plan by year three," he tells ICDC.

Jim Neyer, president of Ken Neyer Plumbing, says he told his 100 employees that a change in health coverage was on the horizon. "We have a lot of younger guys who really don't use their health care a lot, so we felt like we were paying high premiums that should go into an account that they can use in the future," he says. Those employees now are "really happy to see contributions going into their savings account."

One issue the company has is a few employees who have high medication costs and don't yet have the funds in their HSAs to cover that, but Neyer says he is working to find a solution for them.

The company would have seen a 9% rate increase if it had stayed with its original health plan, Neyer says. It took that savings and now contributes $1,200 for individuals and $2,400 for families to the employees' HSAs in weekly increments, he explains.

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