Tiered networks

Summary

Tiered networks organize healthcare providers into different levels based on cost and quality, helping employees make informed choices about their healthcare while still saving money. This setup allows employees to access affordable, high-quality care that fits their budget and needs. For employers, offering tiered networks can manage healthcare costs and provide a flexible and comprehensive health insurance plan that supports employee well-being and retention.

>70%

of employees consider their employee-backed health insurance to be affordable.

200-300%

return on investment for employers who offer health insurance benefits.

88%

of employees ranked health-related benefits as “very important” or “extremely important” in a 2022 SHRM survey.

What are tiered networks?

Navigating healthcare options can feel overwhelming. But tiered networks are here to simplify things a bit. Think of tiered networks as a way to organize healthcare providers into different levels based on cost and quality. This setup helps employees make informed choices about their healthcare while potentially saving money.

Here's how it works: Providers are grouped into tiers, with each tier offering a different level of benefits and out-of-pocket costs. Employees can choose from these tiers based on their preferences and budget.

Tier 1 — Preferred providers: These providers offer the best value, combining high-quality care with lower costs. Employees who choose providers in this tier enjoy the lowest out-of-pocket expenses, making it a popular choice for cost-conscious individuals.
Tier 2 — Standard providers: This tier includes providers who offer good quality care at a higher cost than Tier 1. Employees might pay a bit more out-of-pocket, but still benefit from quality healthcare services.
Tier 3 — Non-preferred providers: Providers in this tier are usually the most expensive. Employees opting for these providers will face the highest out-of-pocket costs. But they still have the flexibility to choose their preferred healthcare professionals.

Offering tiered networks can be a win-win for both employers and employees. For employers, it helps manage healthcare costs while encouraging the use of high-quality providers. For employees, it provides flexibility and options to match their healthcare needs and financial situations.

Considering that 86% of American employees work for companies offering employer-sponsored health insurance, tiered networks can enhance the overall healthcare experience. This makes it more accessible and affordable.

How do employees use tiered networks?

Let’s imagine your customer support specialist, Olivia. Olivia is always juggling client queries and ensuring customer satisfaction. When she needs to see a doctor, she doesn’t want to worry about finding one that fits her budget and provides quality care. That’s where tiered networks come in handy.

Olivia checks her company’s tiered network plan and sees that providers are grouped into different levels based on cost and quality. She decides to choose a Tier 1 provider for her routine check-ups and minor health concerns.

Why? Because Tier 1 providers offer the best value with the lowest out-of-pocket costs. And Olivia knows she’ll get top-notch care without breaking the bank.

Next, there’s Chris, your new graphic designer. He’s still getting settled in and figuring out his healthcare needs. Chris uses a Tier 2 provider because he values a balance between cost and convenience. While it’s a bit more expensive than Tier 1, he finds a doctor close to his new home, which makes life a bit easier while he’s getting used to the city.

Finally, there’s Emily, your sales manager. Emily needs specialized care for a chronic condition. She chooses a Tier 3 provider who is highly recommended for her specific medical needs, even though it comes with higher out-of-pocket expenses. For Emily, the peace of mind and specialized attention are worth the extra cost.

Tiered networks give employees like Olivia, Chris, and Emily the flexibility to choose providers that fit their unique needs and budgets. It’s all about making healthcare accessible and manageable, so your team can focus on what they do best.

How do tiered networks impact employees?

Tiered networks can significantly enhance employees' healthcare experience and well-being. Here’s how:

Ease of access and cost savings

Tiered network structures help lower out-of-pocket costs for employees who choose higher-tier providers, making healthcare more affordable and accessible. Over 70% of employees find their employer-backed health insurance affordable, thanks in part to tiered networks.

Improved well-being and satisfaction

Health insurance is the benefit employees want most. Of employees, 92% believe it’s crucial for their company to value their well-being. And tiered networks show employers care by providing affordable, quality healthcare options. This supports employees’ physical health and reduces stress, enhancing their overall well-being.

Boosted employee morale

Having access to affordable, quality healthcare leads to higher employee morale and retention. Employees are more likely to stay with an employer that offers such benefits, which is vital for businesses competing for talent.

A 2022 SHRM survey found that 88% of employees consider health-related benefits very important. Offering tiered networks meets these expectations, promoting company loyalty and reducing turnover.

Enhanced productivity

Access to affordable healthcare means healthier, more productive employees. Without the financial burden of high medical costs, employees can focus on work, resulting in fewer sick days and higher engagement. This benefits both employees and the company.

Why should employers offer tiered networks?

Offering tiered networks can be a game-changer for both employees and employers. For starters, offering good health insurance keeps employees happy.

In fact, 56% of Americans with employer-sponsored health benefits consider their health coverage a key factor when deciding whether to stay at their current job. By providing tiered networks, employers can offer comprehensive and affordable healthcare options, making it easier to retain top talent.

Then, having a competitive health insurance plan helps recruit new talent. Unsurprisingly, 60% of workers consider benefits a decisive factor when accepting a job offer.

That means that offering a top-notch healthcare plan with tiered networks shows potential hires that you care about their well-being. This can make your company more attractive in a competitive job market.

Finally, offering high-quality health insurance reduces the number of sick days employees take. A study looked at data from the Medical Expenditure Panel Survey and found that employees with health insurance were much less likely to miss work.

Think about it: When your employees know they’re covered, they’re more likely to take care of small health issues before they become big ones. That means fewer days stuck in bed and more days feeling good and getting things done.

What are the best tiered network plan providers?

We got you. Let Nava's benefits experts do the heavy lifting. Contact us here for a personalized vendor recommendation.

‍