Your renewal is coming. You do not have to make the plan worse.

Move to a lower-premium plan design with the same carrier and the same physician network. Nothing changes about who your people see or where they go.

The premium reduction becomes a pool of money your company controls rather than the carrier. That pool is the whole mechanism.

A Section 105 plan pays employee expenses below the new deductible, administered by a third party. Employees carry a card rather than filing for reimbursement.

Whatever the pool does not spend on claims stays with the company at the end of the year. That is the figure the illustration above puts a number on.

A Medical Expense Reimbursement Plan is a type of Health Reimbursement Arrangement. It lets an employer fund some or all of an employee deductible, coinsurance or copay, and cover other qualified medical expenses, on a tax-free basis.

That is what makes it possible to buy a high deductible plan and then customise it so the employee sees little or no deductible and no copay. There is room to increase benefits at the same time, and the existing carrier stays as the healthcare provider.

A worked example is easier than a definition. An employer is paying a high premium for a plan with a $500 individual and $1,000 family deductible. They move to a plan with a $2,500 individual and $5,000 family deductible, which costs considerably less. Employees still see a low or zero deductible. The employer funds the difference between what the employee is asked to pay and the deductible on the plan that was actually purchased. The premium saving is larger than the funded difference, and the gap is what the employer keeps.

More employees in a pool leads to better pricing and cost. Like-minded employers who want to lower cost, keep people healthy and use current healthcare technology can come together to form their own plan.

Each employer still designs its own level of benefits. What changes is that large claims are absorbed collectively rather than by one employer alone. The traditional alternative is that every employer carries its own worst year by itself.

Aetna, Cigna, Anthem Blue Cross and UnitedHealthcare share a large overlap of the same providers. The discounts that actually apply to your claims can differ by ten percent or more between them.

A review of your claims can identify which network is more competitive for the care your people actually use. Networks also differ in how they manage large claims, which affects cost independently of the discount.

Reference based pricing addresses the cost of hospital charges directly. A traditional PPO plan pays a hospital charge after a contracted discount, typically 25 to 40 percent. Reference based pricing instead pays using Medicare as the benchmark, plus a reasonable margin of around 25 percent. Hospitals are accustomed to being paid the Medicare allowed amount.

The approach can produce claims savings of up to about 30 percent. Generally suited to self-funded groups. It changes how providers are paid, so it needs member communication planned alongside it.

Organ transplants are becoming more available across healthcare, and every one performed adds to an employer plan cost. The traditional approach is simply to pay the cost of the transplant. That flows into total plan claims and shows up in the following renewal.

Buying a separate policy for a small premium moves that cost off the plan. It directly reduces total plan cost and produces lower increases over the long run.

Prescription drugs represent roughly 25 percent of total claims on a typical health plan, and specialty drugs continue to get more expensive. Not every prescription vendor discounts the same way, so there are several routes to lower the cost of the identical medication.

Patient care management does the other half of the work. Reducing unnecessary prescriptions, drug interactions and side effects lowers medical cost as well as pharmacy cost.

Infusion therapy has traditionally been performed in a hospital setting, which is the most expensive place to do it. Independent infusion centres can perform the same therapies at a far lower cost, and where it is clinically appropriate some infusions can be done at the patient home. Analysing claims data identifies which patients could reasonably move, so this is a targeted change rather than a blanket policy.

Separately, beyond the cost of hospitalisation itself, hospital bills are almost always produced with errors. Bills can be audited by an independent firm and the errors reported and recovered. That reduces claims cost directly, without changing anything about the care the patient received.