C428 Paper 2SK1

C428 Paper 2SK1 Seamus Company Healthcare Plan Name College of Business, Western Governors University February 2021 Seamus Company Healthcare Plan A1. Due to the increasing costs of healthcare, the Seamus Company is looking for an affordable answer to rising healthcare costs and maintaining the quality and service at a reasonable price that Seamus Company has provided its employees. Moving away from the current fee-for-service plan. Seamus is looking for the best plan available. The current Fee-for- service plan costs are on a continual rise. They contain unneeded services that increase the overall expense not only to Seamus but its employees. Managed-care plans offer the ability to better control costs along with catering to the needs of our employees. The Big Three After looking at available options for our employees, cost savings, health improvement, tax advantages, and overall quality we are looking at three plans. All plans provide for better- managed care. 1. Preferred Provider Plan 2. Health Maintenance Organization 3. POS Health Plan Each plan allows us to move away from the current costly fee for service plan. Preferred Provider Plan Preferred Provider Plan (PPO). Is a managed health care plan that uses a provided list of doctors, specialists, and others that are subscribed to the plan. PPOs also give our employees better flexibility in seeking outside services that better suit their needs. It also has wider access to doctors, allowing for more flexible care. As not all employees will fit into one coverage plan. This plan works very well for employees who can not just on a single physician to meet their family needs. You do not have to pick out a primary care physician for all the employee or their family to see. This allows them the flexibility to cover needed specialists or needs to cover family members who may not live in the same household, but they are required to cover them due to legally binding agreements. Drawbacks are the increased cost and deductibles, and copays to the employee. They also cover less in out-of-network services requiring the employee to pay more out-of-pocket cost. Benefits are more initial controlled up-front costs, but the employee can better fit the coverage to their needs. Health Maintenance Organization Health Maintenance Organization (HMO). Is a plan that uses a more structured list of providers. Those providers have agreed to a reduction in rates if the patient stays within the network of the plan provided. But additional costs can incur by going outside of the network for services that are not approved by your current network doctor. Costs are better controlled, and it gives our staff options to lower cost on available plans and initial copays. Each employee chooses a physician from a large list provided and that physician then directs the individual or family care. They take charge of providing direct care to the patient and can direct them to specialists as needed thereby controlling unneeded medical costs. By using the approval and recommendation from the primary care physician the out-of-pocket costs to see a specialist are less than they would be going out of network. The HMO plan still covers the employee or family if they are out of network area and need emergency care. Benefits good coverage for employees and family will by keeping costs low. Provides good quality coverage that fits most of their needs. Drawbacks are the limited list of physicians, limited control of individual access leaving employees to look for better services. Point of Service Plan Point of Service Plan (POS). Is a plan that offers the affordability of an HMO but allows your physician the ability to better tailor the services needed by the patient. It does require the employee to pick a primary care provider and they can also see other physicians or specialists to better suit their or a family member’s needs. The employees get a better deal by going directly to the primary in related costs. But they will pay a little more for outside services not approved by the primary physician. This type of program works well for employees that may need to see an occasional specialist or out-of-area physician, clinic, or specialist. Benefits a better plan than an HMO but not all the costs of a PPO plan. Drawbacks are the requiring of a primary care provider that may not be your current physician. Seamus Meeting the Needs. A1a. All three plans help us control the rising cost of health insurance. By enrolling in a plan, it allows us to work with our employees in providing them with great medical coverage and ensuring that we meet the needs of our employees. In changing from the current fee for service plan. We have an excellent staff and we want to keep our key employees, by changing the plan we meet the needs of Seamus company in cutting overall costs and meet the needs of good quality medical coverage for our employees. The plans listed above provide the coverages that are needed and all three provide great coverage. The main goal is to control costs for the Seamus company. It is also known for taking care of its employees and retaining their services. This goes a long way in keeping great employees and influencing the prospective quality of new applicants to fill new positions. Changing our current plan to a better-managed care plan will allow us to better control the costs and savings these plans provide. Each plan has a yearly negotiated rate that helps control costs and provide great services. All plans allow for Seamus to pay directly into the plan and enjoy the added tax benefits. It streamlines the services and allows our resource management staff to apply their needed efforts elsewhere. Thereby cutting costs of the time- consuming plan we have now. The Plan A1ab. As CFO I am recommending, we move to the Preferred Provider Plan. Of the three plans, the PPO provides the greatest flexibility for our staff and their families The Preferred Plan reduces overall costs to the Seamus company. Allows direct payments into the program giving Seamus a tax advantage. It also helps us keep our key people, they get to keep their current family physicians, and expanded coverage is provided with little or no inconvenience. Payments and deductibles will be lower as an added benefit. Meeting the Goals A1b. (Control and Cost) Control the initial startup costs are limited in transitioning to the PPO program. We can work directly with each employee on direct costs, monthly premium fees and help them set up HRAs, Health Reimbursement Accounts. With the PPO program, they offer a wide variety of health informational programs that allow us to train as a group or as individuals to better take care of themselves through education and practices that can be provided by their physician. With wellness programs seeking to improve the overall health of our employees and their families, we can improve productivity, decrease sick time, and improve their overall long- term health. Cost savings would begin immediately in converting to the PPO program. This would be seen through the overall cost reduction in premiums paid by Seamus company through a negotiated pay provider. The employee would also pay part of the premium giving the company even more savings. This would allow us to use those needed funds elsewhere. While enjoying the tax-related benefits of the premiums being paid directly by Seamus company into the plan. Aligning our Needs A1c. The need to reduce overall medical costs and meeting the needs of our employees can be met. By transferring our current costly and time-consuming medical insurance program to a PPO we are streamlining our cumbersome program to a more cost-effective and progressive program. It reduces the direct amount that the Seamus Company pays for its current services and allows us to pay into one direct program. Thereby saving the company time and money. It allows us to use the available tax-exempt services by using a single-payer system. We also help our employees by providing better medical services, better health education, and controlling the expanding out-of-pocket costs for them. We can offer to set up tax-free HRA’s to help them mitigate their out-of-pocket costs. Benefits of Risk Management A2a. By transferring to the PPO, we are putting ourselves at an advantage of using negotiated rates. It transfers the management of the program to the insurance provider. They can provide better services to our employees through the mitigation of negotiated rates. We go from paying a fee for services that varies widely and is time-consuming to a managed cost service. We transfer the risk from Seamus Company to a management plan. Costs are controlled and better services are provided, and they manage unnecessary medical procedures saving out-of- pocket costs and increasing premiums. The Gain A2b. By changing from our current medical insurance plan, the benefits to the Seamus company are the savings in cost, better employee health, and keeping our top employees. Where Seamus benefits are directly in a one premium program, we reduce our overhead costs from the current costly plan into a plan the company and the employee pay into as one direct payment into the new PPO plan. It mitigates the companies' and employees’ costs into a manageable plan. The shared savings to both is beneficial, and tax-deductible. In changing to a PPO, we gain in the time and cost currently used by the staff servicing multiple plans into a single plan managed by our insurance provider. This allows our staff better utilization of that time to improve our position. With the PPO plan, we can focus on providing a healthier environment to work in and provide better health education to our employees and their families. This will help us in keeping key people and a positive work environment, reduce sick time, and lower costs. The employees will have better-managed health plans that they can work with their physician to improve their health, a better hands-on approach for the employee. Pitfalls A2c. PPO plans can be overused. Where the former plan was difficult for employees and family the PPO plan streamlines services. That can lead to excessive visits for small common remedies and additional non-needed services from specialists. Thus, increasing the yearly premium costs and out-of-pocket fees. This in turn drives up the overall costs of insurance yearly and will increase the costs of premiums that Seamus will have to pay to provide its employees with healthcare coverage. Additionally, that you will have employees that will not use those services and an illness or a procedure avoided now becomes more costly in time lost at work and medical expenses that could have been mitigated to a lower cost. In their minds saving money but in the long term more costly services needed. Employee Advantages A2d. The new plan offers lots of new advantages for our employees. It will be up to Seamus company to lead the way in helping employees to better health. With education on the new plan, we can help our employees seeking better health for their families. The new plan offers programs from better health, preventative healthcare, eating right, exercise, and quitting bad habits. Encouraging our employees to meet with their doctor and health education partners to take a positive approach to their healthcare. We can meet their needs of keeping individual healthcare costs low. Their physician can help them control costs by making sure unneeded procedures are controlled. Plus improve the overall health of each employee and their families. By taking the lead in offering those programs Seamus will show they care about their employees and the environment around them. Partners A3a. With the new PPO plan, we can work with local community health programs to better fit the needs of our employees and include what we have to offer the community. It allows us to work with agencies, clubs, awareness clubs to provide a better healthier environment for our employees and allows us to offer our services in kind. In working with a local gym and employees doctor we can customize healthy activities to improve our staff. By offering our employees a discounted membership. We can help our employees take a positive role in improving the health of the employee and their families. We can work with the gym to provide goals for each employee and help them set up goals for their families. We can award prizes for the employee and their families by meeting their goals. A goal could be a paid day at an amusement park for the family. By improving the health of each employee, we keep rising insurance costs down. Healthier employees mean fewer employee sick days. Healthier families mean less time off employees need to care for family members. We provide a healthier positive work environment for our employees and that increases the production of each employee. The company cuts its overall insurance costs and improves employee performance thus increases the overall production and position of Seamus Company. . Not meeting the goals A3b. The new plan offers cost savings and improvement to the bottom line of the company and the wellbeing of our employees. But it can become a cost also. Programs are set up and not used. Costs of memberships to health clubs. Even educational health training is not taken advantage of. That cost can increase the complacency of the company and its employees. The other side of that can be the excess usage of programs available. Health training seminars used to get out of current work projects, Excessive screening programs used to placate healthcare insecurities or to just get out of work. This all takes the initiative of Seamus Company and its employees to utilize the benefits to the fullest but keep costs in mind. The Way to Go A3c. PPO a managed care plan offers us all the requirements need to meet the goal of the Seamus Company. It provides a cost-effective medical plan, better coverage for our employees, and a tax break. This plan allows us to provide better coverage for our employees. It will help us improve the overall health of our company bottom line. It helps us improve the quality of life for our employees and their families, sick time, excessive leave, and health education. It allows us to partner with local clinics and community health programs to improve our employees and improve our presence in the community. By partnering with a local health club, we can improve the overall well-being of our employees and their families. This partnership for Seamus is an effective way to help mitigate rising insurance costs. Plus, it allows the employee to help control their out-of-pocket medical expenses in a fun educational, and healthy productive way. A3ci. The PPO and Health Club membership gives us the tools to provide better services to keep and gain key employees. It has direct tax advantages in single-payer premiums for the company and its employees, it allows us to include Health Reimbursement programs to help mitigate the out-of-pocket expenses incurred by our employees and it’s a tax advantage to them through payroll deduct. By eliminating our current costly and time-consuming plan. We can better manage the new PPO and monitor its progression in improving the overall health of our employees. By utilizing the Health Club Membership, we provide healthy and educational services to our employees and families to use that benefit us in overall lost sick days, personal days to be with sick family members, education to take a proactive approach to prevent costly long-term illnesses, and encouraging the cessation of bad habits that directly affect the overall health of our employees and production for the company. As the company CFO, I recommend the change in healthcare plans due to all the advantages listed above. This is a positive investment for our company. It controls costs for Seamus and its employees and provides the opportunity for improvement for all.