How to Create a Zero Deductible Medical Plan

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If you’re a Business Owner, CFO, or HR Professional that views your employees as assets and investments…

In this article, we’re going to cover some valuable tips for business owners, presidents, human resource professionals, and anyone else that manages benefits for an organization on how to dramatically improve coverage on group medical plans without changing carrier.

Our strategy works with traditional plans, health savings account plans, health reimbursement arrangement accounts, fully insured, self-insured, or level funded plans. Additionally, these strategies will work in any state and for any company with five or more employees on their group medical plan.

A Few Caveats to Consider:

  1. We’re not hyping or selling a particular insurance company, carrier, or plan here.
  2. Just because your broker hasn’t mentioned this, doesn’t mean it’s not an option.
  3. This is not a silver bullet fix. It’s been proven over a decade to work in many different areas.

Keep in mind: The purpose of this article is to open your mind to new strategies that can reduce your healthcare costs immediately, provide improved coverage, attract better employees, retain those employees, and dominate your industry sector.


However, there is any number of reasons why these strategies may not work for your company. This is not a one-size-fits-all approach. Typically, we work with entities that have between 5 and 100 employees and are the right cultural fit for us.

Why Focus on the Deductible?

In the past 10 years, health insurance deductibles have more than doubled in cost, causing increasing strain on family finances and preventive care. Many studies have shown that over 30% of employees aren’t receiving proper care for medical conditions due to the resulting out-of-pocket expenses.

Unfortunately, too often it’s the decision-makers in an organization able to afford these expenses that are turning a blind to the brutal realities that their employees experience. In fact, 87% of employees across the country are living paycheck to paycheck and this financial constraint results in not getting care.

Retain Employees with Attractive Benefit Packages

We’re currently experiencing a low unemployment environment, which makes this an important issue to address right now. Attracting and retaining talented employees is crucial to your organization’s survival and success going forward.

A good salary is no longer enough to attract the best people. Neither is a fancy marketing campaign, a nice company truck, or company uniform. If you want to stand out from the pack in your area, the best way to achieve this is with a Rock Star benefit package that has a zero deductible environment for the most expensive issues employees face.

The Solution: Utilize Secondary Insurance

Once you hear the solution, it may seem a bit obvious to you. We’ve been implementing this strategy for the past decade and it involves a variety of tools and techniques to accomplish but we’ll keep things clear and straightforward here.

Because we’re an independent advisory firm we use over a dozen different companies and 50 different products building this solution. And as we mentioned, this is not a one-size-fits-all scenario, which is why expertise plays such a crucial role.

The solution is buying insurance on top of your medical insurance. This is also referred to as secondary  insurance, gap insurance, or an umbrella policy on top of medical insurance. Note, these are generic terms and shouldn’t be confused with any one product or company, as this sometimes confuses people when they hear the term gap insurance.

Essentially, gap insurance is buying insurance to fill the gaps in your coverage. Think of this as someone else paying the bill for different levels of treatment. For instance, imagine if we paid the deductible for you when you needed blood work done, an MRI, CAT scan, or emergency room visit. Then, instead of us paying the bill we used an insurance company to cover the bill. Not your primary insurance company, mind you, but another insurance company or companies.

This can also be thought of as reinsuring the risk that is inherent in most major medical plans. It’s very similar to what major insurance companies do on large claims that hit their books. They purchase reinsurance to cover the large unexpected claims that exceed a given amount. And this is exactly what we do, but we do this on the front end of the risk spectrum.

Utilize gap insurance to create zero deductible environment.

Consider the Medical Needs of Your Employees

To get a good understanding of this from the employee perspective, try the following exercise. Open up your medical plan booklet and see what the deductible is for all of the medical plans that you offer your employees.

Once you have that figure, look up the out-of-pocket maximum you have for each of the plans. This amount is the most out-of-pocket risk that they will incur on major issues. Most people tend to look solely at the deductible but it’s important to focus on the out-of-pocket maximum number, as well. 

Now, imagine a single mom on your payroll having to incur an MRI on her shoulder thinking it might be a torn rotator cuff. Imagine how it is she will come up with $1,500 or more for the test and then even more on top of that to fix the shoulder.

Imagine that employee sitting all day at a computer in discomfort not wanting to spend the money to even see if the issue is a torn rotator cuff. Do you think she is truly enjoying her work and her day thinking about her shoulder the whole time?

Of course not!

Or imagine you have an employee that suspects their child suffered a concussion at a sporting event but realizes they’ll incur a $3,000 deductible when they go to the emergency room. While you might imagine that no one would ever delay care for a child, the reality is that such significant costs can cause people to hesitate.

Now imagine, instead, that we paid the bill for that parent. So, when the parent takes their child to the emergency room, they don’t have to worry about that first $3,000 deductible hurdle. At that moment, their sole concern can be with the health and safety of their child.

Do you think they would go now?

When making health insurance decisions for your organization, it’s important that you consider and implement strategies that have real impact on the well being of your employees. We’ve been doing this for a long time and know that the strategy we’ve outlined here has real bottom line impact to employees, their families, and your organization.

Simply denying or blaming others for the realities faced by your employees and millions of Americans every day does not make these problems go away. Instead, commit to doing something different with your healthcare plan. We have the expertise to help you do this and we’re just a phone call away.

If you’re a Business Owner, CFO, or HR Professional that views your employees as assets and investments…


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