American Airlines’s New Direction in Employee Healthcare

As consumers navigate an increasingly complex health insurance market, American Airlines simplified matters to provide savings for the nearly quarter of a million people it covers

With healthcare costs on the rise for another year, several major employers have been trying to find new ways to manage insurance and employee benefits—particularly for those that employ thousands of people growing increasingly frustrated with rising costs and a confusing marketplace.

To say this kind of directional change is necessary—not least of all from an HR standpoint—would almost be an understatement. A 2012 study by the Integrated Benefits Institute found that poor health costs employers $576 billion per year (compiling sick days, lost productivity, and medical expenditures), and as that cost continues to rise the average premium for employers has risen by nearly 20 percent in the past five years. What’s more, a recent report from the Kaiser Family Foundation notes that even when employers cover their insurance, employees are still picking up more of the cost.

There are opportunities for employees to save money, but it means a better understanding both of healthcare options and the marketplace. The healthcare market can be an overwhelming thing for even experts to try to understand, so American Airlines has decided it will take extra steps to make sure its workers understand what they need before forking over a chunk of their paycheck in the hope that if an accident or illness ever were to occur, the plan they chose would provide the appropriate coverage.

In 2019, American Airlines added a healthcare navigator to its employee benefit options, a lower core option deductible, domestic-partner coverage in the core option, and a new annual enrollment tool to help its employees choose the most appropriate medical plan for their needs.

The navigator, called Accolade, provides help to employees and their family members by helping them find in-network doctors and providers, identifying ways to help save money on healthcare expenses, and answering any questions and resolving issues related to healthcare bills.

On the prescription front, American Airlines is making use of Express Scripts to help employees fill short-term prescriptions at any pharmacy in the network and secure prescriptions for long-term or chronic conditions via mail-order service.

Immediate savings are already available. American Airlines reduced its core option deductible by $500 for single employees and by $1,000 for families that it covers.

Besides that employee-friendly upgrade, the company is also pushing for change at local levels. American Airlines has joined Texas Instruments, Southwest Airlines, and other employers in forming the Dallas-Fort Worth Business Group on Health, a coalition working on various healthcare issues. Together, the members provide coverage for more than seven hundred thousand employees and family members, and the group has to work hard and stay creative to ensure employees are satisfied with their options (and what they’re paying for them), Marianne Fazen, the group’s executive director, told The Dallas Morning News.

“The challenge is how to keep employees’ share of out-of-pocket costs low enough so they won’t stop using healthcare,” she said. “They resent all the cost-shifting, and the fear is they’ll get upset and go elsewhere to work.”

Tom Vertich, benefits strategy manager with American Airlines, has been an instrumental part of bringing plan changes to fruition for the company, which covers almost 250,000 members. His work in the field has given him insight to forward-thinking models. He’s worked as both a national accounts benefits consultant and as an HR benefits professional for three Fortune 500 firms, as well as being involved in various organizations dedicated to improving healthcare in the United States. He served on the National Association of Health Underwriters’ Health Care Reform Committee during the initial implementation of the Affordable Care Act, and was the president of one of its local Florida chapters. He also served as a local chapter president for the International Society of Certified Employee Benefit Specialists.

“American Airlines has been a long-standing partner committed to reducing healthcare costs and creating greater access to quality care for its employees,” says Hill Ferguson, CEO of Doctor On Demand. “Under Tom’s thoughtful direction, American Airlines is reimagining what healthcare looks like for today’s workforce and helping people live healthier lives, inside and outside the office.”

At American Airlines, Vertich is continually tracking data for employee health plans and managing the company’s pharmacy plan. He wants to ensure the data he collects is translated into something that is understandable to employees and that they take the opportunity to use the new navigation tools to make better decisions.

Whether American Airlines can poise itself to upset the healthcare model entirely and do away with middlemen like Amazon, Berkshire, and JP Morgan did in 2018 remains to be seen, but if the company’s new system improves user engagement, it’s a step in the right direction toward driving larger change in an industry that’s desperately in need of disruption.

Any positive change for employees should be recognized, but Fazen says the larger question remains unanswered.

“All of this is promising, and employers are glad to watch it happening,” Fazen told The Dallas Morning News of the coalition that includes American Airlines. “But we haven’t solved healthcare costs yet.”