Executive Summary: Risk-Covered vs. Add-On: How the Tier Classification Affects Employer Economics and Behavior
LFP-15.05, The Product Architecture#
Every service in the tiered model is classified as either risk-covered, included in the administrative PEPM and funded through the plan’s cost structure, or add-on, priced separately and requiring a distinct employer purchasing decision. The classification principle is direct: if the service reduces claims cost, it belongs in the risk-covered stack because the savings fund it. If it does not reduce claims cost, it is an add-on because the employer should make an active choice rather than receive it automatically at the tier premium.
The classification drives behavior in ways that affect outcomes. Risk-covered services are purchased when the employer selects the tier. Adoption is universal. Engagement varies by population characteristics, but availability does not, the pharmacy formulary produces savings whether or not the member is aware of it; the facility steering conversation occurs when the procedure is scheduled, not when an earlier purchasing decision was made. Add-on services require a separate decision, and friction reduces adoption among the employers who would benefit most.
At Core, risk-covered services include claims adjudication, eligibility management, stop loss coordination, compliance documentation, basic employer reporting, the member portal, the broker dashboard, and network access. Add-ons include dental, vision, voluntary life, and voluntary disability, benefits the employer chooses to offer independently of the administrative premium. At Plus, the risk-covered stack expands to include domestic facility steering, pharmacy optimization, maternity management, MSK pathways, chronic disease programs, enhanced member navigation, and enhanced employer analytics. These are bundled because the savings they produce exceed their cost. At Black, risk-covered services include the entire Plus stack plus cross-border care coordination, international pharmacy purchasing, SDOH signal integration, advanced chronic disease interception, mental health access with social isolation screening, GLP-1 management, member concierge, predictive analytics, and the broker intelligence portal.
Two classifications merit explanation. The broker intelligence portal is risk-covered in Black even though it does not reduce member claims, it functions as a distribution investment that aligns broker and TPA interests rather than a member benefit requiring separate billing. Including it in Black’s administrative premium means the TPA absorbs the cost, certified broker partners receive analytics that improve their advisory work, and more Black placements follow. The economics are reinforcing. SDOH signal integration is risk-covered in Black specifically because the remote and distributed Black workforce has documented isolation risk that correlates with mental health utilization; for a Core population working in a shared physical workplace, the same screening produces weaker claims impact and the classification would not hold.
The aggregate economics across the tiered model depend on each tier’s risk-covered services producing savings that exceed their cost. A program classified as risk-covered that consistently fails this test destroys value on both sides and eventually forces repricing. The classification is not a marketing exercise. It is the economic logic that determines whether each tier is sustainable.