Key metrics for the success of your group health plan
Regardless of your industry, there are a number of components that make up the core of the most successful employment benefits packages, one of the most important (and in-demand) being health insurance. The question here is how can you or your HR team judge the success of your plan while ensuring it is meeting the needs of your employees? Here, we discuss 7 key metrics that you can employ to help you gauge the success of your group health plan.
Check out our 5 quick tips on designing your perfect employee benefits plan.
Metric 1 – Loss ratio
Calculated by taking the amount you pay (your premium) and dividing it by the amount the insurer pays out in claims, this ratio is essential in determining the health of your plan and is often used in calculating premium increases.
As an HR professional, knowing the ratio of your health plan and comparing it with industry standards can help provide you with a sound negotiation tool when it comes to negotiating premium increases or even coverage elements. In some cases, your current and historical loss ratio can even be used to provide a ballpark estimate on future premiums or premium increases.
Learn more about loss ratios in this article from Pacific Prime Hong Kong.
Metric 2 – Average claims per member
Calculated by taking the number of claims submitted by the number of employees covered this will tell you, on average, how many claims are submitted each year by your employees. Comparing this to either an industry benchmark or historical average, this can gauge the overall utilization and satisfaction with your group health insurance plan.
Tracking this metric also generates a wealth of useful group health plan data that can be used to help you not only better understand plan utilization. It also acts as a litmus test that can help to identify problems. For example, by tracking and analyzing the claims submitted by each person we are often able to help HR identify individuals who claim more than average along with individuals who are submitting costly claims.
From there, we help HR teams to work with these employees to help ensure they are receiving the support they need while ensuring claims do not massively impact the loss ratio.
Beyond that, this data can also help to uncover where your employees prefer to receive care. This information can be used to try to steer employees away from certain high-cost providers, or to identify whether the plan is actually meeting their health needs.
Metric 3 – Insurer/broker response time and claims processing time
Time, as you know, is money. Spending hours a day or month on chasing insurers or brokers for information or replying to employees who are having issues with plans can be not only frustrating but also take you away from working on other, possibly more important tasks. This is where this metric can help.
In truth, this metric can actually be made up of a number of similar metrics that when combined help you judge the overall level of service you are getting from an insurer. You can then compare this to your company and employee’s needs and judge whether the plan you have is actually working.
For example, many companies we work with will track things like number of claims vs broker/insurer response time, number of claims vs average time to settle a claim, number of claims vs employee complaints, and most importantly, when the insurer broker communicates.
Generally speaking, insurers with lower premiums will tend to have lower levels of service. Securing a plan like this will often save you money upfront, but if you have to spend half your day calling the insurer, not getting answers, waiting weeks for claims to be settled, waiting weeks for new members to be added, or old members to be removed, etc, you could end up actually paying more in the long run.
It is important to measure when the insurer or broker communicates important information to allow you to make timely decisions. For example, if they take a long time to provide claims details or renewal information this could leave you with little to no breathing room to find better coverage or negotiate for better premiums.
Metric 4 – The number of people covered by the group health plan
Commonly referred to by insurers as ‘participation rate’, this metric looks at the number of employees insured by a plan versus the number of employees eligible for the plan (achieved by dividing number of employees insured by number of eligible employees) and will often compare this percentage with a benchmark for similar businesses. In practice, this metric will actually vary for each company and is normally adapted to meet the type of insurance plan you have selected.
For example, in our experience, many companies are securing group health plans that cover inpatient care only. If an employee wants additional coverage for outpatient care the company will usually cover a percentage of the premium, say 50-80%.
Looking at the number of people who are securing additional coverage or have utilized extra coverage then comparing this to industry benchmarks can be a solid indicator as to the overall success of your plan. If you find that a higher percentage of employees are selecting to add additional coverage than the benchmark this will likely point to the fact that your plan is not being perceived by employees as useful. This, in turn, means it might be worth looking into upping benefits offered by your plan.
Metric 5 – The ratio of dependents covered by your group health plan
This is certainly a metric that will not be used by all companies, but that said, it is an incredibly important metric for companies who extend their health insurance plan to employee’s dependents.
Calculated by taking the total number of participants and dividing it by the number of employees covered, this ratio can help determine whether you are covering more or less employee’s dependents.
It is important as, in our experience, it is often dependents who have the highest number of claims. This is especially true for children who are covered by the plan as children will statistically have to visit the doctor more often. In turn, this could have adverse effects on premiums your company pays.
If you find that you are ensuring more dependents per employee than is standard it might be worth looking into your plan and seeing whether this is having an impact on your premiums or claims.
Metric 6 – Employee demographics
This metric, calculated by looking at the number of employees and breaking them down into groups such as age, sex, location, etc., can be a major help in the search for group health plans and determining the overall satisfaction with it.
For example, knowing your the age groups of your employees can help you determine what types of cover will be most utilized and the potential medical issues your staff may seek care for. You can then search for plans that meet some of these needs or work to set expectations with existing plans.
Metric 7 – Questions asked
Like some of the above metrics, this is really more of a series of different related measurements that can be tracked to help you with your plan. For example, by tracking the number of questions asked by new plan joiners, the number of questions asked by more senior staff, etc. you can gauge exactly how engaged people are with the plan.
If you see that new employees ask a fair number of questions regarding health benefits then it is probably a good indicator that there is confusion with the plan and better explanations/onboarding is needed.
It would also pay to track the types of questions asked and by whom. For example, if your team is getting a lot of questions about claims or benefit limits you this indicates that you might be spending an inordinate amount of time answering questions that could be avoided through better documentation. Beyond that, certain questions like “Can I keep my own doctor” could point to demand for a better provider network or potential areas where employees could be unhappy with the plan.
How can I set benchmarks and implement these group health plan metrics?
One of the best ways you or your HR team can implement and track the above metrics is to actually work with a broker like Pacific Prime. In truth, the majority of the above metrics are actually part of our corporate insurance service that we offer to all companies. Our team of corporate insurance experts strive to work with your business to ensure you and your employees have the most optimal coverage while reducing the amount of time you spend managing the plan and answering questions.
To learn more about our group health plan service, visit our new corporate site today.
- Insurance brokers vs agents: Key differences explained - May 6, 2022
- Overcome imposter syndrome in the workplace with these 5 tips - May 4, 2021
- 5 tips for retaining talent post-COVID-19 pandemic - April 14, 2021