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Cost Effective Plan Design Strategies ? November 2007

A Cleveland-based company with about 75 employees in Cleveland and Columbus has utilized the Anthem/ERC Health Plan for the past several years. Beginning in 2007, they made several plan design changes and they modified their employee contribution strategy in order to (a) add multiple plan options, (b) reward healthy lifestyle behaviors, (c) empower employees to become better healthcare consumers, and (d) control costs.

  • Added a second "dual" option plan and incorporated the idea of a CORE plan and a BUY-UP plan.
  • Modified their employee contribution strategy so that the payroll deductions were set at 45% of the CORE plan premium regardless of plan choice (meaning that 100% of the difference in the full premium cost for the BUY-UP plan was the employee's responsibility).
  • Added two (2) financial incentives (known as Wellness Credits) to the plan design in order to encourage participants to reduce their health-related risk factors and make better lifestyle choices. The two (2) Wellness Credits that were added were the Non-Tobacco Credit and the Health Risk Appraisal (HRA) Credit which could add up to 10% more to the company subsidy (reducing the employee contribution percentage to 35% from 45% of the CORE plan premium).

In the future, additional plan design alternatives may be included by adding a Health Savings Account (HSA) option and expanding the Wellness Credit program so that it encompasses spouses since a significant amount of the overall claims experience is attributable to non-employee dependents.

If you'd like to learn more about cost effective plan design strategies and/or incorporating wellness incentives into your employee contributions, contact Richard Hughes, CEBS, President & CEO of MagnaHR at (440) 248-9048 or

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