Do Contributions Matter? PART I

As a law firm insurance advisor, we advise law firms on how to structure their benefit plans and their employee contributions towards those plans. As you can imagine, every firm has their own strategy on this unique to their firm culture (i.e. rich benefits vs. cheap benefits). We essentially help them make their benefits consistent with their firm goals.

A hot topic is employee contributions to the premiums. That is, how much and in which way, do employees pay premiums towards their benefit plans. Some are based on family structure (family vs. single) some are based on which plan the employees chose, etc.

We recently completed an analysis for a law firm that was contributing a fixed % (percentage) of the premium regardless of which plan the employee selected. So if the employee elected the “high plan” the firm paid a % and if the employee elected for the “low plan” the firm paid the same % amount. Not entirely surprising, under the current system, twice as many employees elected for the “high plan” than the “low plan”.

Now comes the NEW contribution model…

The firm will base their contributions on the “low plan” and if employees want the more expensive plan, the “high plan”, they can “buy up”, that is pay the entire premium difference to be on the upgraded plan.

Which plan will employee go to now? Will people migrate to the lower cost plan now when they have to foot the bill? We’ll see and I’ll update the blog when the enrollments are done in a few weeks.

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