Anna Claire’s Costumes, Inc., has experienced medical benefit cost increases of 16 and 19 percent over the last two years. The benefits manager believes that high hospitalization rates and unnecessarily long hospital stays may explain these increases. The company wants to control costs by reducing hospitalization costs.
Marguerite Thomas, a Canadian, and Margaret Phythian, a Minnesotan, each tried to convince the other that the health care system in her respective country was superior. In Canada, Marguerite enjoys nationalized health care, where everyone is covered. She does not worry that she may need care she can’t afford. She is willing to pay the taxes necessary to support the system. She doesn’t mind waiting several weeks to get certain elective procedures done because she knows that everyone is getting the care they need and she is willing to wait her turn. Margaret, however, likes the high-quality, high-tech care available to her in the Twin Cities area through her employer-provided HMO. She gets high-quality care and never needs to wait for treatment. She also likes the lower tax rate she pays, partly because the U.S. government isn’t funding a nationalized health care system.
Knowledge Networking, Inc., is a growing business of high-tech and electronics equipment and software. It is a specialty retail and online business that has tripled its revenues in the past seven years. The company started fifteen years ago and includes fifty outlets on both the East and West coasts. In 2005, the company went public and now, despite the financial crisis, it is doing very well with innovation and creative offerings. The company has 5,600 full-time employees and 1,000 part-time employees. Knowledge Networking, Inc., provides all the social insurance programs and offers its employees a cafeteria plan with many choices.
For the health coverage, Knowledge Networking employees have a choice among the following:
Employees also have generous choices of group disability coverages, dental and vision care, premium conversion plan, and flexible spending accounts as part of the cafeteria plan.
Use the table below to describe what you think Knowledge Networking’s group disability insurance plans look like.
Knowledge Networking, Inc.
Group Short-Term and Long-Term Disability Insurance
|Definitions and amounts|
|Financing/cost and who pays|
|Insured and by whom?|
Give an example of the benefit plan choices that the following two employees would make:
The Meridian Advertising Agency has 1,340 employees in six states. The main office is in Richmond, Virginia. Fifty percent of the employees are women in their childbearing years. Most employees are in good health. The major medical losses last year occurred because of Jack Denton’s heart surgery, fifteen baby deliveries, and four cases of cancer treatment. Jack Denton is the creative director of the agency.
Meridian is using EB-Consulting to assist in choosing health care and dental coverages. Currently the agency fully insures six options of health plans:
The Meridian Agency provides $145 each month. The rest is paid by the employee using a premium conversion plan.
Compare the current health care programs that are used by the Meridian Agency in terms of the following:
Jack Denton (the employee who had heart surgery) has two children. He lives twenty miles west of Richmond in a rural community of one hundred people and farms his land on the weekends. His wife is expecting another baby in four months. Before his surgery, Jack and his wife evaluated the plans and selected the one that best fit their needs.
Meridian is considering adding a dental plan.