Guide to Tiers in Group Health Insurance Plans

Competitive employee health benefits are an effective tool for attracting great candidates, cultivating worker satisfaction and loyalty, and improving employee retention. But what if your organization structure has layers with different compensation and benefit requirements? From entry-level staff to C-level executives, tiered coverage provides group medical insurance solutions for everyone on your team.

In this guide, you’ll learn what tiered coverage means, how to approach it, which group medical insurers offer it, and how to find the right group medical insurance plan for your organization.

What are tiers in employee health benefits?

If your organization structure has different compensation requirements for each level, then a one-size-fits-all approach to employee health benefits is probably not suitable for you. This is where tiers come in.

Generally, a tiered approach to your group medical plan means employees get access to different benefits according to their position in the organization structure. For each tier, you can select the extent of coverage for each category of benefit (hospitalization, doctor visits, dental, maternity, and so on) and geographical area of coverage, for example.

How should I approach tiered employee health benefits?

There are several ways to approach this.

Separate group medical plans for different levels

With this setup, C-level executives are on an entirely different plan (sometimes even with a separate insurer) from the rest of the staff.

As an example, let’s say your organization has younger, local staff with no business-travel requirements, whereas the upper management and C-suite executives are expats who must travel frequently for business and expect to spend time in their home countries.

For the younger, lower-level staff, an insurance plan with co-pays, local coverage, and no dependent coverage might make sense. For the higher-level employees, a plan (perhaps from a different insurer) with full coverage, a wider geographical area of coverage, and coverage for dependents might be more appropriate.

Tailored group medical plan with tiers

With a tailored plan, all of your employees are on the same plan from the same insurer, but you can select the type and extent of coverage for each benefit category (inpatient, outpatient, dental, maternity) for the different tiers.

The tiers can be set up according to your needs, for example:

• Tiers for different levels of staff
  • For example, all staff have comprehensive coverage for inpatient and outpatient benefits, but local staff only have coverage in Hong Kong, while C-level staff have coverage worldwide.
• One tier for employees, one tier for dependents
  • For example, employees get inpatient, outpatient, dental, and maternity coverage, but their dependents are only covered for inpatient and outpatient expenses.

Which group medical plans offer tiers?

Nearly all of Alea’s insurance partners offer group medical plans that can be tailored with tiers.

In general, tailored plans are available to groups with more than 20 members. For groups with fewer than 10 members, it may make sense to stick to one tier, but this really depends on the makeup of the company. For example, if there is one CEO in a group, you might need two tiers. For groups with more than 10 members, two tiers are generally recommended. Any more, and things can become tricky to manage. Again, this depends on the makeup of your organization and the way you set up your tiers.

Compared with local insurers, global insurers may provide more flexibility when it comes to implementing multiple tiers for smaller groups (with fewer than 10 people).

Note that tailored plans are experience-rated rather than community-rated, meaning the group’s premiums rise based on your company’s claim ratio, and that premiums may increase significantly if big claims were made in the previous year.

Find the best group medical insurance solution for your team

To find the best group medical insurance solution for your team, get in touch with Alea. We will work with your organization and key stakeholders and decision-makers to determine the best type of coverage for your organization. Consultations are free.

We work with over 25 insurance providers in Hong Kong, including trusted and established companies like April, AXA, Bupa, Chubb and FWD, and have years of expertise in group medical solutions.