How Zimbrick Switched To A Fully Self-Funded Health Plan

Zimbrick is a retail automotive dealer with more than 700 full-time employees operating 14 locations in three cities across two states. They moved all employees to a self-funded plan after previously offering either a self-funded option or a health maintenance organization (HMO). The Alliance asked Vikki Brueggeman, human resources director at Zimbrick, to share the company’s insights into making that transition work for everyone.

Why Did Zimbrick Switch to Offering Only the Self-Funded Plan?

Moving everyone to a self-funded option achieved three objectives for Zimbrick:

Creates equity in our benefit options.

Everyone has access to the same plan, which was not true before. The HMO option was not offered at our Brookfield or Rockford locations because those employee groups are so small. Even in Madison, we saw a steady migration away from the HMO plan as employees realized self-funded premiums were cheaper. Once HMO enrollment dropped to 60 employees, it didn’t make sense to maintain dual choice.

Provides transparent information.

We are implementing a wellness program, which includes adding wellness components to our Summary Plan Description. One way Zimbrick can measure our ROI on wellness is by evaluating employees’ aggregated health information from year to year. Our managed care option was unable to give us access to that information. With the self-funded option, it’s routine.

Delivers efficient cost-savings.

One of Zimbrick’s strategic initiatives is to use our size to leverage efficiencies and maximize effectiveness. While we have nearly 500 insured lives, we are still a small plan overall. By focusing our resources on one plan, we become more efficient and can focus on cost-saving strategies.

How Was the Switch Communicated to Employees?

A well thought out communication strategy that suits the needs of your business is essential for success. Our human resources team mapped out a five-step strategy with scripted messages.Step 1: Gain “C-suite” support: Depending on your business, key leaders to win over in the “C-suite” could include the chief executive officer, chief financial officer, or chief operating officer.

Step 2: Give advance notice to leaders at each location: We told general managers at each location about the changes to respect the relationships they have with employees and to gain their buy-in. This was important because once the announcement was made, they had to deal with any morale issues at their location.

Step 3: Hold mandatory employee meetings: We felt very strongly about two things: that employees should hear the message from the top, in this case the CEO, and that all affected employees should hear the same message. Our message was scripted in the form of talking points and frequently asked questions. The CEO delivered the initial message and the human resources team handled the implementation process. It was important for employees to know that we were going to provide both enrollment and education assistance.

Step 4: Offer one-on-one enrollment assistance: HR contacted each of the 60 affected employees. We went to their workplace to help them instead of making them come to us. This sent a strong message that we cared about them as individuals; that it wasn’t just about “the numbers.”

Step 5: Partner with experts: We called on our Third Party Administrator (TPA), The Alliance, and our pharmacy benefits manager (PBM) to provide on-site seminars for employees and their spouses.

What Advice Do You Have for Other Companies?

There are three things that are absolutely essential:

Prepare a transition strategy. Map out timelines, assign responsibilities, and follow your plan.

Communicate. Be a resource to employees to answer questions and reassure them that the company will provide support during and after the transition. Information is power.

Top management support is critical.

Have You Noticed Other Benefits of Being Fully Self-Funded?

As part of our wellness program, we added Health Risk Assessments to educate employees about the status of their health. Although individual information was completely confidential, Zimbrick received an aggregate report on the overall health of our employee population. We really want to be able to monitor how employee wellness changes from year to year so we can measure return on investment, which is essential for our senior leadership. For the first time, we will be able to move forward with access to the information we need for all employees.

How Have Employees Responded?

Overall, the transition received very little employee push-back. Everyone understood the need to focus our financial resources on a single plan. Of the 60 employees, 55 transitioned to the self-funded option. Several people decided to go on their spouse’s insurance and one employee opted to get his own private policy. Some of the former HMO users miss the ease of never seeing a medical bill or EOB, but now they are becoming educated on how much medical services actually cost.

Does this Plan Affect Your Ability to Monitor the Health Care Delivered to Employees?

One of the great things about The Alliance is that the quality component is built right into their program. The Alliance encourages providers to improve care by aligning financial incentives with results through contracts. The Alliance also provides employees with the QualityCounts® report, which provides quality ratings on hospitals so they have the information needed to compare providers. I wish all our employees recognized our concerns about the level of care they receive so they would rest a little easier. It certainly reassures me to know that The Alliance has our back.

What’s Ahead for Zimbrick and Its Health Benefits?

The unknown factor to being entirely self-funded is the actual “state of health” of employees who formerly used the HMO, since their health care claims will affect our reinsurance rates next year. One scenario is that HMO employees are healthier because they had essentially unfettered access to health care in the past. Another scenario assumes that our unhealthy employees had migrated to the HMO option to take advantage of lower out-of-pocket costs. We hope to learn more from the data we get from The Alliance.