Premium-based benefits plans promise they will provide you and your team with “real value” when it comes to your plan. What you’re really getting is a plan that provides a perception of value and comes with a recurring cost that you end up paying “just in case.”
The streaming service you never use
We all know and love Netflix, but nowadays it seems like there are hundreds of streaming services that we must subscribe to just to watch our favourite shows. We end up subscribing to some, finish binging whatever’s hot this month, and then stop using it altogether. Then we’re left with an ongoing cost for something we never use. Somehow, we justify the continued cost because it “might come in handy down the line.”
Ask any financial planner and they’ll tell you that these background costs eat up more of our budget than we realize. Once you’ve started paying it’s hard to stop. You assume there’s some value there (or will be down the road) and aren’t willing to risk giving it up.
Now, you may be super confused that a benefits provider is ranting about the weird state of television and the decisions people make because of it, but we promise there’s a point.
It’s all about perceived value
Like streaming services, benefit plans can end up becoming one of those background costs. When we use premium-based plans to cover our health and dental expenses we’re stuck with a regular monthly cost. What’s worse, we’re on the hook for that cost whether our team makes claims or not. Just like we’re paying for our streaming services regardless of how many shows we binge.
It’s hard to cut the proverbial cord because what if!? What if I suddenly need prescription drugs, extensive physiotherapy, and braces all at once? That fear factor creates a perceived value in a premium-based benefits plan just like “what if an amazing show comes to Netflix” creates perceived value in your subscription.
The movies you’re watching now or the benefits you’re using now don’t justify the cost, but surely in the future, you’ll get your money’s worth. That’s the lie we tell ourselves.
Psychology 101
Both streaming services and benefits providers know this and take advantage by increasing costs regularly. Just enough that you don’t walk away and still convince yourself there’s value there.
Once your costs increase, they rarely ever go down. When was the last time you heard about Netflix decreasing subscription fees, or an insurance company reducing premiums? So, even if you have a low-claim year (or swear off TV) your premium will be the same.
It all adds up to dollars down the drain. Payments are made “just in case” for a day that never comes.
New on Netflix this month: cost & claims-based benefits
Unlike popular streaming services, there are ways to pay for benefits based on how much you use them, or what you want your budget to be, so you don’t overspend.
Claims-based benefits
With a claims-based benefit plan (aka our Enhanced Health Blend), you set a ceiling on how much you’ll pay in each category, then only pay for claims reimbursed plus an admin fee. It gives you amazing cost control plus saves you money if your claims for that year are low!
Cost-based benefits
With a cost-based plan (psst, our Health Spending Accounts), you set your budget, make fixed contributions, then give plan members the freedom to reimburse any eligible expenses. You are bestowed the gift of total cost control and your team gets the full value and autonomy over their benefits.
Now you’ve moved from a sneaky recurring background cost to a model with transparency where you only pay for what you use, or what you’re comfortable spending. Wouldn’t it be great if Netflix let you do that?
Questions anyone? Bueller? Bueller...?
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