By Jennifer Revell
Most employers are insuring the wrong 75% of healthcare spend.
Traditional health plans are often designed to prepay predictable, low-cost claims rather than protect against true catastrophic risk. The result? Employers pay premiums, carrier margins, administrative costs, and risk loads on expenses that may not need to be insured in the first place.
Consider this:
- 75% of employees typically incur less than $4,000 in annual healthcare costs
- Another 20% have manageable, moderate expenses
Yet just 5% of employees drive the majority of total healthcare claims
Insurance was created to protect against significant, unpredictable risk—not routine healthcare spending.
That’s where The Difference Card + MERP strategy comes in:
- Reduce overinsurance of low-cost claims
- Use employer healthcare dollars more efficiently
- Preserve protection for high-cost, catastrophic events
- Deliver meaningful savings without reducing employee benefits
The goal is simple: Fund the 75%. Insure the 5%. Stop overpaying for everything in between.
So true yet plans still insure a $1,000 dental benefit, $80 office visit, $450 MRI, etc. Health insurance premiums are essentially a high interest banking arrangement for paycheck-to-paycheck employees who don’t have two nickels to rub together.
HOMEWORK ASSIGNMENT:
What is a medical expense reimbursement plan (MERP)?
