Why Credit Unions Should Consider Unbundling Medical Benefits

Healthcare cost containment is one of the biggest concerns facing most credit unions. For years, credit unions have struggled with providing necessary and valued benefits to their employees, while also protecting their bottom line. When it comes to self-funding, the opportunity for cost savings — even for small (<100 employees) and mid-size (101-500 employees) credit unions — is clear. Once the decision to self-fund has been made, however, the question arises — to bundle or unbundle vendor services?

It’s a myth that bundling all services through one insurance carrier saves money. What employers may save on administration, they lose in competitive rates, flexibility and transparency.

credit-unionHealth plan benefits are not like buying the luxury package on a new car. When everything is bundled together – larger tires, navigation, sunroof, heated seats – you save money versus buying each a la carte. Instead, what happens when a client bundles healthcare – stop-loss, medical, Rx, dental, vision, wellness, and other voluntary benefits – they get some at a fair, or even low, market cost. But they also get some at a higher than market cost.

With bundling, you literally end up paying the price. The problem is compounded since you don’t know the breakout of the individual vendor fees because everything is lumped together. Unbundling invites competition – which is a good thing. You have transparency and can see exactly what you’re getting and how much you are paying.

One size does not fit all. You never see two credit unions with the exact same medical profiles and scenarios. Depending on factors like demographics, geography, environment and heredity, the healthcare needs profile of an employee base can vary widely, even between credit unions in the same state.

Unbundling allows you to shop around for vendors that are the best fit based on factors such as your location, headcount and overall employee profile. You can evaluate among three to four pharmaceutical plan vendors, among three to four dental plan vendors, etc. Not every vendor is going to be great across every type of plan. When you unbundle, you have the ability to choose the best vendors with the best services and the best rates.

Today’s employees are more informed. Providing the ability to respond to the needs of your employee base and to exhibit flexibility in the selection of healthcare services not only exhibits good financial sense for containing healthcare costs, it also helps to attract and retain top talent. Credit union employers that can efficiently tailor programs and provide healthcare services that are important and needed by their employees hold a significant business advantage.

Now, more than ever, self-funded healthcare benefit plans makes financial as well as sustainable sense. Traditionally, self-funding meant employers choosing between being handcuffed to a single integrated vendor or wrestling with several administrative processes for each service. Using the data and analytics available with a healthcare benefits plan administration platform, such as, CU Benefits Alliance, can now fine-tune unbundled plans to provide credit unions the exact services they need without overpaying. Today, unbundling gives credit union executives the ability to get more out of every healthcare dollar spent.