Employer Moves Benefits From a 120% Rate Increase to Over $221,000 in Savings

How Novaura, a Central Texas benefits broker, helped an employer improve participation, perception, and value
Case Study

About the organization

A regional lumber company in Central Texas with approximately 60 employees. The workforce is primarily yard workers and other blue-collar roles, with a small number of office personnel. The mix of physical labor jobs and varying income levels made plan affordability and simplicity especially important for this employer.

Where the organization started

For nearly a decade, the lumber company operated on a transitional relief (TR) plan, a pre-ACA plan structure that offered stable renewals but came with a significant limitation: The employer could not make any changes to the plan without canceling it and starting over. As long as the plan stayed untouched, renewal increases were manageable. 

That changed when the company crossed 50 full-time equivalent employees and became an Applicable Large Employer (ALE) under the ACA. The transitional relief plan was no longer an option. The first year under an ACA-compliant plan was uneventful. The second year was not.

  • A single high-cost claimant generated over $1,000,000 in annual claims.
  • The medical loss ratio hit 350%.
  • The carrier responded with a 120% premium increase, more than $650,000 in additional annual cost.

The challenges

The premium increase was unsustainable. Absorbing more than $650,000 in new costs was not realistic, and passing those costs on to employees (many of whom were hourly workers) was not an acceptable outcome.

At the same time, the employer wanted to improve the benefit experience. Employees on the old plan were paying a significant share of their claims out of pocket.

The goal was to find a solution that protected the business financially while also delivering a plan that employees could use without the burden of high out-of-pocket costs.

The challenge was to build a transparent, self-funded plan from scratch that was strategic and sustainable for this specific workforce.

The solution

Novaura designed an unbundled, self-funded plan built around the specific geography, demographics, and claims history of this workforce. Every component was selected with both cost efficiency and member experience in mind. 

1
Network design
A strategic tiered network was built around where employees lived and received care, giving them access to their existing providers at the lowest possible cost. A wrap network was layered in to cover any providers outside the primary tier.
2
Stop-loss partnership
Novaura engaged a stop-loss carrier that actively participated in claims analysis as a partner in guiding members toward high-quality, lower-cost care options throughout the year.
3
TPA selection
A TPA was selected for its ability to administer the plan in ways that aligned with the employer’s goals and employees’ experience, ensuring clean claims processing and clear communication.
4
First-dollar coverage
To remove financial barriers for employees, the plan was designed with $0 deductibles and $0 copays through the tiered network. Employees could access care without worrying about upfront out-of-pocket costs.

Results

The move to a self-funded plan delivered significant financial results for both the employer and its employees in the first plan year. 

  • Total savings versus the fully insured renewal exceeded $221,000, driven by pharmacy strategy, improved contract alignment, and member guidance.
  • The employer was able to capture $52,000 from pharmacy rebates and leave $101,000 in the reserve account at the end of the plan year.
  • Employees paid an average of just 8% of their claim costs, compared with roughly 20% under a typical fully insured plan. That represents approximately 60% less out-of-pocket expense for workers.

The company saves over $220,000 in year one, and their employees paid significantly less than half the out-of-pocket costs of the average health plan. The transition to self-funding gave this employer the tools, transparency, and control they had never had under a fully-insured arrangement.

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