Quit Wasting My Healthcare

Co-insurance: The Key to Employer-Employee Alignment

Before I begin, it is important to define the word co-insurance.  Co-insurance is simply the fixed percentage of total healthcare costs that an employee pays.  Example: an employee with a 20% co-insurance benefit would pay $20 out of a $100 doctor bill.  The employer or insurance company would pay the remaining $80.

The power of co-insurance is that it moves up or down in relation to the cost of care.  Employees with co-insurance get financially rewarded for making more cost-effective healthcare decisions.  When the employee saves money, the employer saves money in either reduced claim costs or lower premium expectations.  The direct relationship between employee cost and the employer cost of care create a powerful form of financial alignment – an immediate financial incentive that does not have to be an “extra” on top of the employer benefit already provided.

While deductibles shift more cost to the employee and thus protect the employer, they are inherently flawed as a consumer directed incentive strategy since they fundamentally represent a limit that once exceeded protects the employee from having to consider the financial value of a healthcare decision.  Co-pays are even worse mechanisms for alignment and have no intrinsic financial incentive value.

The problem with co-insurance is that most employees cannot get access to the total cost of their care in order to calculate what they would owe across various healthcare decisions.  Compass PHS is the solution to this problem as its fundamental service is to help employees identify and understand those costs.

Save Money.  Create Alignment.  Use Co-Insurance in your Benefit Plans.