Costs and Benefits of Providing Transition-Related Health Care Coverage in Employee Health Benefits Plans FINDINGS from a SURVEY of EMPLOYERS
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Costs and Benefits of Providing Transition-Related Health Care Coverage in Employee Health Benefits Plans FINDINGS FROM A SURVEY OF EMPLOYERS Jody L. Herman, Ph.D. Manager of Transgender Research Peter J. Cooper Public Policy Fellow September 2013 EXECUTIVE SUMMARY A growing number of employers, both public Twenty-one of the 34 employers in the study and private, are providing coverage in employee provided information about the actual costs from health benefits plans for transition-related health employees utilizing the transition-related health care to treat gender dysphoria. In order to inform care coverage. employer-based decisions and current policy • Two-thirds (14 employers) reported no actual debates regarding provision of this coverage, this costs resulting from employees utilizing the study describes the experiences of 34 employers coverage. who provide transition-related coverage in their • One-third (7 employers) reported some actual health benefits plans. Overall, we find that costs related to utilization by employees. transition-related health care benefits have zero or very low costs, have low utilization by employees, • However only three of the seven employers and yet can provide benefits for employers and reported the actual costs with any degree employees alike. of specificity. All three of these employers reported that their actual costs from utilization are Employers report very low costs, if any, from very low: adding transition-related coverage to their - In one case, actual cost over two years was health benefits plans or from actual utilization of only $5500, which comprised only 0.004 the benefit after it has been added – with many percent of total health care expenditures. The employers reporting no costs at all. other two employers characterized the costs as “negligible” and “minimal” at less than 1 Based on data collected in this study, costs of percent of total costs or total claims paid. providing transition-related health care coverage are very low, including for employers that cover Few people will utilize transition-related health a wider range of medical treatments or surgical care benefits when they are provided. procedures for transition. When an employee utilizes transition-related health care benefits, their claims may result in Overall, we find that transition-related health care costs to their employer. The type, number and cost of services accessed by individuals will benefits have zero or very low costs, have low utilization by vary, yet as described above, the costs of these benefits, if any, are very low, as is the utilization employees, and yet can provide benefits for employers and of the benefit. While utilization rates depend on employees alike. the size of the employer, estimates based on the best data gathered in the survey result in annual utilization rates of approximately: Twenty-six of the 34 employers in this study provided • 1 out of 10,000 employees for employers with information about the cost of adding transition- 1,000 to 10,000 employees, and related coverage to existing health care plans. • 1 out of 20,000 employees for employers with • Eighty-five percent (85%) of these 26 employers 10,000 to 50,000 employees. reported no costs associated with adding the coverage, such as increases in premiums in the More specifically: first year. • Two employers with less than 1,000 employees • Four employers (15%) reported costs due to reported zero transition-related claims over a adding the coverage. Three employers provided combined six years of providing this type of information about the costs they incurred from coverage in their health benefits plans. adding the coverage based on projections of • For employers with 1,000 to 9,999 employees, utilization. These costs based on projections average annualized utilization was 0.107, with a seem high in light of the findings from prior lower bound of 0.027 and an upper bound of research and this study regarding actual costs 0.214 claimants per 1,000 employees. and utilization rates. These projections may • For employers with 10,000 to 49,999 employees, reflect actuarial overestimates of the utilization average annualized utilization was 0.044, with an of these benefits and subsequent cost of claims. upper bound of 0.054 claimants per thousand For instance, two employers reported a 1 percent employees. increase in total cost to their transition-inclusive plans, based on projected benefit utilization, Employers reported that providing transition- whereas two similarly-sized employers reported related health care coverage benefits them in a lower costs due to actual benefit utilization. variety of ways. Employers reported that they 2 Executive Summary - continued provide the coverage in order to: elsewhere in the U.S., or in another country. • Make them competitive as an employer within - However, twenty-five employers (74%) offer their industries and help them with recruitment transition-related benefits with no dollar limit. and retention of employees (60%); Almost all employers with a limit reported a • Reflect their corporate values, including equality $75,000 lifetime limit or higher (21%). and fairness (60%); • In this sample, there was no relationship • Provide for the health care needs of their between the scope of the coverage provided employees and improve employee satisfaction and reported costs of adding the coverage, and morale (48%); and meaning providing broader coverage did not result in higher costs for surveyed employers. • Demonstrate their commitments to inclusion and In one case, actual cost over two years was only $5500, which diversity (44%). comprised only 0.004 percent of total health care expenditures. Not surprisingly, then, a majority of employers The other two employers characterized the costs as “negligible” and also reported that they “minimal” at less than 1 percent of total costs or total claims paid. would encourage other employers to add the coverage, and none Of the 33 employers responding to questions would advise against adding the coverage. about the process of adding transition-related health care benefits, 94 percent (31 employers) With regard to the scope of transition-related reported that there were no significant barriers health care coverage that employers are providing, to adding the coverage. Employers also provided while many transition-related claims would be practical guidance to other employers to aid covered under these employers’ plans, some do them in adding the coverage for their employees. not provide coverage for many medical treatments Employers recommended that other employers: or surgical procedures that the WPATH Standards of Care describe as medically necessary when • Work with their insurers and Third Party clinically indicated for an individual. Administrators to discuss the coverage they can offer and to address any shortcomings in their • Employers provide coverage in their health medical guidelines. benefits plans that cover many medical treatments and surgeries that an individual • Conduct research and consult with other may need for treatment of gender dysphoria. employers that provide the coverage to better For most of the hormone therapies and genital understand costs they may incur and to be surgeries asked about in the survey, 100 percent better informed to negotiate with their insurers. of transition-related benefits plans provide • Work with benefits administrators to make sure coverage. they are providing competent customer service • Plans are less likely to cover certain to employees who inquire about transition- reconstructive procedures such as breast/ related health care benefits. chest surgeries, electrolysis, facial surgeries and related procedures, and voice-related care. Overall, we find that transition-related health care benefits have very low costs, have low utilization • Only 59 percent of employers cover breast rates by employees, and yet can provide benefits or chest reconstruction, with only a quarter for employers and employees alike. Future covering electrolysis, certain facial procedures, research regarding transition-related health care and voice-related procedures. coverage should consider the negative impact on • Plans also have other specified limitations in employees, and therefore on employers, of not coverage: providing medically necessary care for treatment - Forty-eight percent (48%) of transition- of gender dysphoria. Future research should also inclusive plans have some type of restriction consider the cost savings to employers over time on access to transition-related healthcare that result from providing the health care that their provided out-of-network, including restrictions employees need. of services provided outside of the United States. These restrictions may limit access to transition-related care since providers in the United States may not participate in certain health benefits plans. In this case, employees may seek services outside of their plan, 3 INTRODUCTION A growing number of employers, both public meets current medical standards of care.7 A and private, are providing coverage in employee “defined benefit” means that the scope and health benefits plans for transition-related health limitations of this coverage are described in plan care to treat gender dysphoria. Since 2008, the documentation. Human Rights Campaign has collected data for its Corporate Equality Index (CEI) on the provision of Since 1979, the World Professional Association transition-related health care benefits by the largest for Transgender