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A New Way for Fully Insured Employers to Manage Rising Healthcare Spend

Nick Reber

Danielle Clanaman

At Garner, we believe that for too long fully insured employers have been unable to access innovative solutions to help them manage the cost of their benefits and the health of their employees. In fact, most fully insured employers are left with almost the exact same health plan options that they were given over 30 years ago. As premiums continue to rise rapidly, fully insured businesses often see no option but to stay with their existing insurance carrier and defray costs elsewhere, often by cutting headcount and salaries. That’s why we created Garner’s fully insured offering: a new way for fully insured or level-funded businesses to keep their existing medical carrier while achieving guaranteed savings, enriched benefits, and improved employee satisfaction. Our program has two key components: (i) we turn a portion of the fully insured premium into partial self-insurance, including a stop loss guarantee that minimizes risk, and (ii) we use these self-funded dollars to incentivize employees to see the highest quality doctors. High-quality doctors generate lower healthcare spending by keeping employees healthy and out of the hospital. Therefore, when employees see high quality doctors, employers can offer richer benefits, generate material savings in the first year and lower their annual claims cost. The average 250-life group will save over $2.5 million over a four year period with this design. Below we describe how Garner can work for fully insured employers in more detail.
Provider performance matters
We have gathered healthcare claims records on over 180 million patients, giving us a unique opportunity to understand where the inefficiencies in the healthcare system come from and what to do about them. The results are clear: the single biggest reason why employer healthcare costs are high is that many doctors fail to follow current medical best practice and produce poor health outcomes. The chart below summarizes what our data shows: underperforming doctors add 2.7 sick days per employee per year, and add over $3,000 to the cost of every episode of care. This cost is ultimately passed on to the employer and employee through higher premiums and out-of-pocket care.


Provider performance matters–even for fully insured employers

When we show the above data we often hear the common concern: “we agree, but unfortunately even if we lower our medical claims the carriers will get all the savings.” Garner has created a new way for fully insured employers to share in the savings from more efficient and effective healthcare. The result is immediate savings, richer benefits and lower claims costs over time. The key to our program is to transfer a portion of the fully insured premium into a Garner incentive account. Specifically, this is how the program works:


  1. Employers increase the deductibles on their existing fully insured health plan. Alternatively, some employers who have an existing HRA or HSA match use Garner as a replacement for those programs.

  2. With Garner’s help, employers offer a self-funded benefit via an HRA that covers the out-of-pocket for employees who engage with Garner and see a top performing doctor.

  3. The employer pays Garner a single fixed monthly payment which includes both administrative fees and HRA claims activity. This gives the employer protection if claims activity is greater than expected and we return 80% of unused funds if claims are less than expected.


The diagram below shows the percentage of claims paid by each source in this new model as compared to the traditional insurance model. As you can see, Garner layers on the existing plan, offering additional coverage and lower out-of-pocket for employees.


The benefit of this model is that employees have a clear incentive to see Top Doctors because their out-of-pocket is covered when they do. With more employees seeing Top Doctors, the total claims cost is reduced substantially. Because employees using Garner are far less likely to have a high cost episode of care, Garner can offer HRA coverage at a significantly lower guaranteed cost when compared to existing HRA programs.


Below we give a case study of how this worked for a fully insured employer. This employer was paying $798 PEPM for an employee-only $2,000 deductible fully insured plan. They were able to lower their fully insured premium to $599 PEPM by offering a higher deductible plan. The employer then funded the entire $5,000 deductible with a Garner HRA incentive account. Garner guaranteed that the total spending on the incentive account would not exceed $71 PEPM. Therefore, the employer received a fully guaranteed plan cost of $670 PEPM. This means richer benefits at a 16% lower cost. Additionally, if we succeed in lowering claims below the guaranteed amount, Garner refunds 80% of the remaining claims fund, creating an opportunity for additional savings.

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Garner is an excellent replacement for existing HRA or HSA programs

For many years employers have funded traditional HRA and HSA programs with the hope of their employees becoming better consumers of healthcare. Unfortunately, this has not always been the case and these programs are now not only frustrating for employees, but significant cost drivers for the employer. With Garner, employers can be assured that their plan dollars are only going to employees who are engaging in their healthcare benefits and seeing top performing doctors. And because Garner significantly improves the experience of finding care with our easy-to-use product and dedicated health concierge, employers with Garner can create significant savings while improving employee experience.


Below we show a case study of an employer that had a high deductible plan with an HRA. This employer was spending $92 PEPM for a $3,000 HRA. We replaced the existing HRA with a richer $4,000 Garner incentive account at a cost of $60 PEPM, creating a guaranteed saving of $32 PEPM. Most importantly, when we surveyed the employees, 97% had a more positive experience with Garner than the existing HRA vendor.

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Garner lowers claims costs over time

In addition to year 1 savings, employers that use Garner will also have lower claims experience. This can enable many employers to get more comfortable transitioning to self-funding and for larger groups can help lower renewal premiums. The result is substantial savings over time. Based on Garner’s historical experience, the average 250-employee fully insured employer will save over $2.5 million dollars in the first four years with Garner.


Health insurance premiums are reaching unsustainable levels for many fully insured and level-funded employers. Garner is a new way for these employers to manage their healthcare costs, lower employee out-of-pocket and improve employee satisfaction. If you are interested in our model for fully insured or level-funded employers please reach out to us at

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