Dual Option: Cut Costs, Not Employee Satisfaction
Traditionally, the best of both worlds has been out of reach for employees and companies when it comes to health plan design. Plans designed exclusively by financial officers don’t always address employees’ needs, while plans managed solely by human resources sometimes fail to meet a company’s financial objectives. Fortunately, the landscape is evolving. In the employer-sponsored benefit plan sector, organizations are increasingly seeking solutions that balance both employee satisfaction and cost efficiency.
Over the past two decades, business leaders have faced significant challenges in controlling medical benefit plan costs. Recently, there has been a notable increase in the adoption of the dual-option model. This approach allows employers to offer both a BUCA PPO and a ClaimDOC reference-based pricing plan, giving employees the flexibility to choose their preferred plan. Typically, the RBP option features lower deductibles, reduced out-of-pocket maximums, and decreased paycheck deductions. The popularity of the dual option is rising as escalating premium rates make traditional health plans unaffordable for most working-class Americans.
The most critical aspect for plan sponsors to keep in mind is benefit design. Sharp and experienced brokers can create options that will influence behavior. They know the more members they can drive to ClaimDOC, the greater the savings. Brokers work with human resources to find the right dollar figures that won’t leave those electing to pay up for the PPO feeling punished while properly reflecting the greater cost per employee that the plan will incur for that selection.
The chart below shows the plan design for one of our dual-option clients. With 682 lives on the plan, 451 chose the RBP option while 231 selected the PPO.
Executives, who are often better positioned to manage higher deductibles and greater member cost sharing, tend to select the BUCA PPO option, which generally entails higher contributions from their paychecks. We also do see some adverse selection where high utilizers are taking the PPO. While not ideal for the employer, it’s a small hiccup in a great solution.
Over the last three years, we have added 126 new clients, 24 of which are utilizing a dual-option solution. Why am I talking about a solution only used 19% of the time? Why am I talking about a solution where we don’t make any money on the portion of employees that select the PPO? Because it’s the right thing to do. The most frustrating dynamic in this business over the last 13 years has been brokers not putting options in front of clients. I believe this is a powerful tool that financially benefits members. Any plan sponsor with more than 800 members that hasn’t strongly considered this is not getting good broker advice.
From a human resources perspective, the challenge of balancing cost savings with talent retention is diminishing. Historically, HR departments expressed concern about switching to RBP plans due to potential employee dissatisfaction and turnover. That element is greatly diminished when employees are given a choice. Also, ClaimDOC’s RBP program, executed with a focus on the member experience, significantly enhances employee satisfaction compared to the types of RBP solutions that were more common in the past. The combination of choice and strong satisfaction in the RBP plan option mostly eliminates the blowback that used to be a concern when adopting a nontraditional solution.
Typical savings achieved from offering an RBP-only solution are diluted with dual option, however, our clients are still achieving 20%-25% compared to the previous year medical benefit spend. Certainly, this outcome can vary and it’s dependent on offering a strong RBP option and proper plan design. Regardless, it delivers meaningful progress on cost containment for what is typically the second largest organizational expense after payroll.
One of our clients, a university in the southeast, has seen tremendous savings in its first year on a dual-option plan. After a year on ClaimDOC’s DirectAccess+® plan, the client saved more than $2.3 million. Due to issues with one specific provider, the client decided to switch to a dual-option plan in 2025. The school had a total of 536 lives on the plan, and 437 decided to continue with DirectAccess+. With the dual-option plan, the school is on track to save $2.5 million this year for a total of $4.8 million in savings over two years.
Save money and keep employees happy? Well, it sounds to me like this is going to get a lot more popular in the years ahead.