The insurers are happy to cover staffers, but they charge exorbitant premiums for the 150 agents who take advantage of the benefits program, she says. That is why the company opts to self-insure, paying claims through a TPA, with reinsurance kicking in when individual claims reach $40,000. To keep costs in check, Demarino has become a pro at shopping around for coverage packages, with the help of insurance brokers, and giving employees incentives to manage costs. "Staff bonuses are directly tied to general expenses, which include health care," she says. "Everyone here thinks about how their actions affect bonuses, so they don't abuse their coverage."
When Demarino switched to a mail-order prescription drug program, Express Scripts, along with offering lower deductibles for using generic drugs, employee support made it a success. The mail-order service costs the company less and it benefits employees, Demarino says. They can order prescriptions online or through an 800 number, and the drugs are mailed directly to their homes. The co-pay for generics is only a few dollars for a three-month supply, versus only one month at the pharmacy.
Demarino saw immediate results from the program. Prescription claims had accounted for 25 percent of Londen's medical costs before the switch, but that dropped to 15 percent in the first year that they used the mail-order service, from 1999 to 2000. And even though the company's health-care costs went up, prescription drug costs dropped $75,000.
Demarino has also gotten costs under control by changing reinsurers and TPAs twice in two years -- to get better rates and better customer service. By doing this, she's kept Londen's service costs flat even though industry prices have risen. "We spend a lot of hours dealing with health-insurance costs," she says. It's certainly paid off.Workforce, August 2001, pp. 79-80 -- Subscribe Now!