By Fred J. Meijering, GAIN
The following is the first in an eight-part monthly series on demystifying health insurance, by BrandSource health plan provider GAIN.
There are precious few things more boring than insurance, but not understanding this line of coverage can cost you thousands of dollars each year and potentially expose you to financial liability that you might not even know exists for the plan you selected. Signing a health insurance contract normally makes your company the fiduciary of that plan and the one in the crosshairs if things go south.
We at GAIN are experts in the health insurance space and are the endorsed health insurance provider for AVB/BrandSource. As such, we exist to serve you within or without our plan. Our partnership with you includes consultation on all matters related to health insurance and plan designs, as well as and HSAs and FSAs, among other areas, whether or not we are your provider. This educational series is a part of that partnership and commitment.
Our eight-part series will cover the following topics:
- The five components of any health plan
- What kinds of coverage exist? (Not just what I am being offered)
- What determines my health insurance premium?
- What is the cost of different kinds of health insurance?
- Insurance is not my day job, so how do I decide what to get and how do I know it is right?
- How do I get low premiums and keep them low?
- I want the right health insurance at the right price, and I don’t want to spend time on it. Now what?
Now for Part I of our series — the five components of any health plan. Here they are:
Network: Whether it’s Cigna, Blue Cross, PHCS or another health service company, networks are the part of your health plan that grants you access to doctors and hospitals, often with contracted network discounts.
Pharmacy Benefits Manager (PBM): This is the part of your plan that processes prescriptions at the pharmacy. It includes a formulary or drug list and the procedures for handling access and pricing for each prescription, in addition to rebates from drug manufacturers.
Stop Loss/Reinsurance: This is the part of your plan that handles medical and sometimes pharmacy claims at a pre-determined level and kicks in after the claims fund or cash portion of your premium. It is the actual insurance part of your plan.
Administration (also known as the Third-Party Administrator or TPA): This is the transactional part of your plan. These folks process claims, issue your benefits cards, pre-authorize services and answer your questions.
Premium Allocation: This defines what part of your premium goes to a claims fund, vendors, administration costs, fixed costs and so on. It can include cash management strategies and, with some plans, vendors providing advocacy and medical/pharmaceutical tourism services.
It is important to understand that these five elements are part of each and every health plan. If you never heard of one or more of these components, it is because you plan did not discuss it. This is usually because one or more of these functions is offered by the same provider. Oftentimes, they work to advantage one another with additional fees, monopolistic behavior, and ensuring that all plan activity is kept within the family.
If you have a plan that unbundles these elements and keeps them separate, you can make sure they behave and eliminate monopolistic behavior by monitoring each one independently with full optics, analytics and disclosure of all financial movements.
Once again, we at GAIN are grateful to be joining the AVB/BrandSource team. Tune in next month for a discussion of what kinds of coverage exist — not just what you are being offered.
Fred J. Meijering is a GAIN Health Advisor. You can reach him at Fred@davidsoninsservices.com. YSN is published by BrandSource parent AVB Inc.