Village Auto's previous health care plan didn't require employees and their families to meet a deductible. Dempsey said she believes that continuing with the traditional insurance model would have necessitated putting a deductible in place and continuing to increase employee premiums.
"Village Automotive Group was tired of tweaking their plan design and charging employees higher contributions," said Tim Doherty, a benefits adviser at Pinnacle HR Solutions who helped the group redesign its health coverage.
Although the fully insured plan might seem "safest," because the carrier holds all responsibility for claims incurred, Doherty said, the carrier can recoup the cost of those claims by increasing premiums the following year.
"The carrier has no incentive to control costs," Doherty said. "This is why we've seen double-digit rate increases for several years. Forward-thinking advisers understand it's an unsustainable model."
A self-insured plan is more transparent, Doherty said. "The insurance carrier and the pharmaceutical companies are making a lot of money behind the curtain on a fully insured plan that you can't see or get access to," he said. "By unbundling that, we're able to create a more efficient program."
To make the new plan easier for employees to use, Village Auto introduced an independent, third-party administrator to provide active claims management and oversight of billing. It also implemented a "transparent pharmacy benefit manager."
"Under the self-insured program we were able to access more data — information that we could actually use to improve the plan," Doherty said.
Village Auto invested its 2018 savings to start a cancer-care specialty program, which pairs a patient with a care coordinator to help explain treatment protocols. The group — which has dealerships selling Audi, Honda, Nissan, Porsche and Volvo — also started a separate health advocate program to assist employees as they navigate the health system. "It's been exciting to see how well it works, and we continue to add things in to make the service better and drive the cost down," Dempsey said.
She said the benefits of the nontraditional plan have gone beyond just saving money.
"It's certainly helped us in recruiting and retaining our team," Dempsey said. "They realized the benefit right away by not having continued increases in their paycheck. They also realized the company was doing everything it can to help support them with their insurance costs.
"The company is spending a lot of time, taking the risk and being forward thinking about it rather than just doing what the market says we have to do," she added.
"They know we're all working together to address the major issue of health care, and they know everyone on the corporate team making the decisions are part of the plan with their families."