The Six Core Plan Design Levers
| Lever | Definition | Employer Impact | Employee Impact |
|---|---|---|---|
| Deductible | Amount member pays before plan pays | Higher deductible = lower claims cost | Higher out-of-pocket before coverage kicks in |
| Copay | Fixed dollar amount per service | Predictable but higher claims cost | Simple and predictable |
| Coinsurance | Percentage of cost member pays after deductible | Lower claims cost; more member skin in the game | Less predictable; can create financial hardship |
| Out-of-pocket maximum | Maximum member pays in a plan year | Higher OOP max = lower employer exposure | Better protection for high-utilizers |
| Network | Which providers are covered at what rates | Narrower network = lower claims cost | Less provider choice |
| Drug tiers | Cost-sharing by drug category | Higher tiers for branded drugs = lower plan cost | Incentivizes generics and preferred drugs |
Plan Design as a System
Plan design elements do not operate independently — they interact as a system. A high deductible reduces claims cost but may increase ER utilization if employees delay care. A low copay for primary care reduces ER utilization but increases plan cost. Understanding these interactions is essential for designing a plan that achieves its intended goals.
The Design Objective
IQ Insight
The goal of plan design is not to minimize employer cost — it is to optimize the total value delivered to employees and the employer. A plan that is so restrictive that employees cannot access care is not a good plan, even if it is cheap. The best plan designs balance cost management with meaningful access and financial protection for employees.