Brella is a good case study for how to develop a new insurance benefit from scratch, and I want to share a bit more about our approach to benefit design because I think it can be applied to a wide range of products across the industry.
I’ve written before about how we used human-centered design to better understand employees’ pain points with their health benefits. Through that process we identified a gap in coverage where significant, though not always life-threatening, medical conditions created a sudden shock to the employee’s finances. Major medical insurance provides valuable protection, but high deductibles still loom large over family finances. Traditional supplemental health products fill in some gaps, but still leave families holding a lot of their health risk. So we set out to build a new kind of supplemental health insurance plan that would provide protection for the health situations that hit people’s wallets the most.
But once we decided on our approach, we asked ourselves, “How much should the plan pay? How do you keep a plan that covers thousands of conditions simple enough for consumers to understand? How do you make it flexible enough to work for employees with different levels of financial exposure in different life stages?
Here is how we designed Brella’s benefits—I think it is a process that can work for any number of innovative new insurance products.
- Simplify your benefit trigger.
The simpler your benefit requirements are, the easier it will be for claims to be filed and adjudicated. Ask yourself, what’s the minimum we need to know in order to pay a benefit?
- Group similar scenarios.
If you want to cover a wide range of situations that seem wildly different at first, think about the downstream effects it has on your members. You might find patterns that allow you to create simpler benefit categories.
- Design benefits to match the need.
Keep the employee’s needs in mind and ask yourself, what’s the minimum benefit that would make a meaningful difference in this employee’s situation? More isn’t always better.
At Brella, we cover 13,000+ conditions, and we needed a way to ensure that we paid a benefit amount that would adequately shield members from the bills headed their way. Plus, we wanted our plan to be simple enough for employees to understand.
First, we opted to pay benefits based on an ICD-10 diagnosis code. This has several advantages. First, it allows us to pay benefits as soon as a condition is diagnosed, based on documents most employees will have on hand, often while the member is still in active treatment. This ensures that Brella’s benefits will often arrive before the employee gets any medical bills.
Next, we created three benefit categories so that we could deliver a meaningful benefit across a wide range of conditions. Many supplemental health plans--especially accident medical plans--have very detailed schedules that ascribe varying amounts of value to the covered conditions. It's hard for a consumer to understand what is covered, what's not, and for how much. We simplified things by grouping our covered conditions into similar scenarios to make it easier for the consumer to be able to understand the difference between them.
We all know that a trip to the ER for dehydration is nowhere near as expensive as a torn ACL or a heart attack. Looking at clinical treatment patterns, we discovered that we could pay a lower benefit amount for conditions that just required a trip to the ER or urgent care. We call these Moderate conditions. Conditions that require more intensive treatment like imaging or outpatient surgery are a bit more financially burdensome, so we call these Severe conditions, and we pay higher benefit amounts. For life-threatening conditions that require intensive treatment, we categorized them as Catastrophic. Our catastrophic benefit is always the highest of the three benefit amounts in the Brella plan.
Lastly, we opted for flexible benefit amounts from $100 to $10,000 because we are aiming to keep premium costs affordable by targeting the right amount of benefit right when it’s needed. Sudden, unexpected health emergencies—even the more mundane ones like a deep cut that needs stitches or a bout of kidney stones—can easily drain an employee’s savings account or HSA. Even worse, 56% of Americans had medical debt in collections according to a recent survey, and for ⅔ of those people the amount is less than $5,000. At Brella, we see this as an opportunity to make a difference, keeping people out of debt and on track with their financial plan.
By keeping our focus on the employee’s needs, simplifying our benefit triggers, and grouping common scenarios we were able to design a plan that’s both easy to understand and capable of making a meaningful difference in employees’ financial lives in the event of an unexpected health issue.