Bend the Trend: Lower Healthcare Costs through Benefit Plan Design

Healthcare costs aren’t going down on their own and cost-shifting to employees isn’t a strategy, it’s a delay tactic. The good news? Self-funded employers have more control than they think.

During The Alliance’s latest webinar on benefit plan design, Jennifer Burrus, AVP, Total Rewards & People Technology at UW Credit Union, Jamie Krueger, Director of Human Resources at Crystal Finishing Systems, Inc. and Melanie Schoenemann, VP, Business Growth & Member Strategy at The Alliance shared what actually moves the needle, from steering and tiering to preventive care access to using your own claims data to make smarter decisions.

If you’re a self-funded employer looking for proven ways to lower healthcare costs and create sustainable change, here’s what you need to know. (Or if you’d rather watch it, catch the full webinar on YouTube.)

Why Benefit Plan Design Matters

Many employers have spent years adjusting health plans, trying to manage costs. But while well-intentioned, these changes often produce mixed results.

Employers expect that if they offer good benefits and communicate clearly, employees will naturally make cost-conscious decisions. But in reality, healthcare decisions are emotional, not rational.

Employees Don’t Shop for Healthcare Like Other Services

Employees tend to stick with what is familiar regardless of cost or quality. They often default to:

• Their primary care physician’s referral
• The nearest hospital
• Brand recognition
• Established relationships

Jennifer Burrus from UW Credit Union said, “People are used to the status quo. We’ve all been used to going to your provider and your provider refers you to have a service or treatment down the hall. You don’t think about it. But now we’re encouraging employees to think about whether that is the best possible choice for their care. We tell our employees ‘If you shop for healthcare and take advantage of high quality but lower cost providers, you save yourself and the plan money.’”

Without financial signals built into the plan, behavior rarely changes. But a well-designed plan removes friction from high-value healthcare options while discouraging low-value spending.

Benefit Plan Design Should Guide Behavior

Instead of transferring costs, employers can structure benefit plans that:

• Encourage the use of Preferred-Value Providers who deliver great care at lower costs
• Reduce financial barriers to primary care
• Reward smart healthcare decisions
• Improve long-term affordability

Strategic Benefit Plan Design Levers

The session outlined several proven benefit plan design strategies for self-funded employers.

	Steering and Tiering One of the most effective tools discussed was steering and tiering. Steering uses financial incentives to guide employees toward high-quality, cost-effective providers. This can include making the copay for tier 1 providers $0 or low cost compared to providers in higher tiers. Another option is cash incentives for choosing Preferred-Value Providers for shoppable procedures and services.  Tiering places providers into levels based on quality and cost performance, with lower cost-sharing for Preferred-Value Providers.   Jamie Krueger said, “Crystal Finishing has an onsite clinic employees can use at no cost to them. We also steer employees to Preferred-Value Providers that provide great care at lower costs to us. Additionally, we offer a $700 cash incentive to cover travel expenses when employees receive procedures at designated providers. This has been a game changer in terms of getting employees to choose high-value healthcare options.” This approach helps employees make better choices without eliminating freedom of choice. Employees can still go anywhere they feel comfortable, but they pay less when they choose Preferred-Value Providers.
	Preferred-Value Providers and High-Performance Networks Another key strategy involves identifying high-performing providers for certain procedures or services. Benefit design can: Reduce or eliminate cost-sharing for designated providers Offer travel benefits for high-cost procedures Encourage bundled payment models with one price for an episode of care The Alliance has curated a list of Preferred-Value Providers that aligns cost, quality, and outcomes for our employer-members to access.
	Preventive Care Access This webinar reinforced that preventive care is foundational. When barriers are removed for preventive screenings, annual checkups, primary care visits, and chronic condition management, employees are more likely to stay healthy. This reduces claim costs long-term.

Designing for Behavior Change

Successful benefit plan design considers behavior patterns.

For example, lowering copays for Preferred-Value Providers is more effective than simply educating employees about cost differences.

The Role of Data in Benefit Plan Design

Data-driven decision-making is essential for a successful benefit plan.

Key Takeaways

	Cost-shifting is not a sustainable strategy; it’s a stall. Moving costs to employees buys time but doesn’t fix the underlying problem. At some point, the costs are felt through high turnover, disengagement, and deferred care that turns into expensive claims.
	Education alone is not enough. You can tell employees that Clinic A is cheaper and better than Clinic B. Or you can make Clinic A free, and Clinic B cost them $50. Incentives are the key to changing behavior.
	Preventive care is the cheapest claim you’ll ever have. Remove the barriers to accessing preventive care. When employees regularly use preventive services, the downstream savings are significant.
	Your data is telling you something, are you listening? Claims data, including site-of-care patterns, show employers where employees are actually accessing care. Self-funding allows you to access it and The Allance’s Smarter HealthSM analysis helps you understand it.
	Benefit design change doesn’t have to be complicated. Small, intentional design changes, done consistently and communicated clearly, compound over time. You don’t need to overhaul everything at once to make an impact.

Frequently Asked Questions

What is benefit plan design?

Benefit plan design is the process of structuring an employee health plan to influence how and where people get care. It’s not just about what is covered; it’s about how employers use cost-sharing, incentives, and access to guide employees toward higher-quality, lower-cost options. Done well, it’s one of the most powerful tools a self-funded employer has to control costs without cutting benefits.

What’s the difference between steering and tiering?

Steering is what moves employees toward those higher-performing tiers, usually through financial incentives like lower copays or even $0 cost-sharing for specific providers. Tiering organizes providers into levels based on cost and quality performance. Think of steering as the signal and tiering as the structure.

What are Preferred-Value Providers and how do they save employers money?

Preferred-Value Providers are providers that deliver great care at lower costs. This means employees get great care and employers (and employees) pay less for it.

A Smarter Path Forward

Healthcare affordability is one of the biggest challenges facing self-funded employers today. The webinar reinforced that while the problem is complex, employers are not powerless.

Benefit plan design is a strategic lever that can:

• Lower unnecessary spending
• Enhance employee engagement
• Strengthen long-term financial sustainability

By aligning incentives, removing barriers to high-value healthcare, and using data to guide decisions, employers can move from reactive cost management to proactive healthcare strategy.

For organizations looking to take control of their healthcare spend, the message is clear. Benefit plan design is not just an administrative detail; it is a strategic advantage.

The Alliance can help you design a benefit plan that works for your employees and your businesses. Schedule a free consultation!