Employees have a hard time getting parents added to their company’s health policy even when they’re willing to pay out of their own pocket. And having parents added is one of the most common requests HRs get from employees.
We'll explain why this happens and how as a company HR you can solve this.
Note: This applies only in cases where there is a voluntary selection of parents and not when the company in sponsoring parental cover for all employees
An important concept in insurance is “adverse selection” which increases the risk profile of a group leading to higher claims.
In group health insurance, adverse selection happens when people most likely to make claims account for a disproportionate portion of the group.
When you make it optional for people to add parents to their company’s health policy, incentives dictate that people expecting to make claims on their parent’s medical bill will sign up first. Fewer of those who don't expect to make claims will sign-up, even though it maybe financially prudent to do so.
To protect themselves, insurance companies mandate that at least 40% of employees opt for parental cover, since larger numbers will reduce the likelihood of adverse selection.
This then become a laborious task for the company HR to educate employees on benefits of adding parents to their policy, taking into account each employee's subjective context, to meet the minimum requirement of 40%.
Here are a few things your company can do to improve participation for parental cover opt-ins.
- Send out a form asking which employees would like to add parents. In the form itself provide this information
- Do a cost-benefit analysis for the employees.
- Pricing negotiated by company vs market rates if employee had to purchase on their own
- Likelihood of common diseases and expected medical bills
- Send emails with this information.
- Conduct an internal webinar
- Send details on your internal company chat on slack / flock / teams
- Conduct 1-1 sessions with employees; They will become evangelists for others