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WABASH, Ind. – Credit unions fighting soaring health care premiums may want to check out how Beacon Credit Union used a consumer-directed health plan to cut costs. “Consumer-directed health is a concept and every insurance carrier that offers medical insurance is offering their own model,” said CUNA Mutual Employee Solutions Group Employee Benefits Director John Golden. “It requires a leap of faith because you are banking on that old 80/20 rule that only 20% of employees incur 80% of health care costs -if that holds true then it may work for you.” According to recent studies, despite the calculated risk involved the number of employees enrolled in consumer-directed health models is expected to more than double by the end of this year. “Unfortunately we had several years of very bad experience which caused our costs to go up and in the 2001- 2002 year we were hit hard with increases in upwards of 30% to 40%,” said Beacon CU Vice President of Human Resources Lori Eltzroth. “We were looking at an annual premium for our 120 employees of over $400,000 and we couldn’t get cheaper coverage because of our prior history- no one wanted us in their group.” A brief review of the $512 million credit union’s health insurance coverage reveals that in 1998 the CU offered a fully insured traditional plan where employees could visit any doctor and hospital and other wellness perks. In 1999 the credit union offered a fully insured PPO but if staffers went out of network reimbursement would be 60% after a $250 deductible instead of the in-network 80% reimbursement. Eltzroth says CUNA Mutual had just started offering CDH options and though it was relatively new and untested it was a risk the credit union was willing to take. “I think we were one of the initial credit unions to take a chance with it and now we couldn’t be happier,” said Eltzroth. In 2002 Beacon CU switched to a CDH model, which raised the employee deductible to $1,000 but the credit union would reimburse employees the $750 difference through a health reimbursement account. “Basically we would only be funding the deductible on those employees that need it,” said Eltzroth. “Before the insurance company was on the hook quicker because so many employees would hit that $250 deductible. Now it is a very smart and innovative plan because since the credit union insures that $750 window the burden is off the insurance company. And the best part is that the real-life employee impact remains the same.” Since making the switch Beacon CU has saved $80,000 in the first year and $90,000 the second year. As for employee reaction Eltzroth says education was key to getting employee buy-in. “We explained the reasons behind the move and that this move was not about the credit union being cheap but that rising premiums are part of an industry trend,” said Eltzroth. “We also had to make sure they understood that besides some additional paperwork on their part they wouldn’t be responsible for claims over the $250 deductible. We positioned the `hoop-jumping’ as worth it since it would keep premiums down.” In addition to CUNA Mutual educational seminars, Eltzroth built on the trust employees already had in her by making sure she provided additional training on how to fill out forms and was available to answer any employee questions. She adds that the model has also helped employees become more involved with their health care -if they don’t submit the claim forms they can’t be reimbursed. “This model isn’t for everyone,” said Eltzroth. “We could’ve been over our usual $400,000 by some $20,000 if every single employee met that $1,000 deductible. The first most important step is to have a real feel for your employees- you have to look at your employee demographics and find out how much burden your employees are willing to take on. If you decide it’s the right fit then you’ve just got to educate, educate and educate some more.” [email protected]

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