How to cushion the HDHP blow with voluntary benefit options
Implementing first-dollar savings through customized benefits can help brokers give employees a soft landing into their new HDHP.
Health plans are evolving, and many employers are shifting the financial burden to their employees, often in the form of high deductible health plans (HDHPs). The best brokers teach employer clients how to take a HDHP and incorporate solutions that deliver real value to their employees. This education also includes showing them which solutions make quality health care more accessible.
Explaining first-dollar coverage
For years, large companies with deep pockets offered first-dollar benefits that made health care expenses more economical for workers. As margins narrowed in a volatile economy, corporations, as well as smaller to mid-sized companies, were forced to make difficult decisions and get creative to offer valuable health benefits.
First-dollar benefits are payable by a health or medical insurance plan without the member or insured incurring an upfront cost, most commonly in the form of a deductible. PPO and HMO plans often offer first-dollar in-network benefits with low copays and no deductibles to steer members to participating providers. Ever-increasing premiums and first-dollar benefits are often responsible for the spike in medical costs. Thus, HDHPs evolved to remedy these issues by adding a deductible upfront to plan designs.
Protecting profits at the expense of employees
As the cost of health care escalates, employers of all sizes are compelled to protect their earnings. HSAs were created to set money aside for employees to affordably access day-to-day care. If employees do not maximize the HSA funding, there is a higher out-of-pocket expense because the plan’s deductible must be met prior to coverage. Because of the lack of HSA funding, HDHPs often create a plan too expensive to utilize.
Also: Using HSAs to cope with health and financial crises
Even when employers offer plans with lower deductibles, employees will often choose a plan with a high deductible because they feel it’s the only way to afford the monthly premium. Unfortunately, as deductibles rise, it takes longer for people to satisfy the costs before full coverage can begin. This expense leaves some feeling a lack of financial protection from their health plan even though they pay a high price for it each month.
People who feel they can’t afford to utilize their health plans effectively tend to consume health care in a manner that costs them and their employers more over time. Health issues escalate for those who forgo seeing a primary care doctor because of out-of-pocket costs. Also, the lack of primary care leads some to use urgent care or emergency rooms for conditions that don’t belong in that setting, or for concerns that have escalated beyond control. This practice is very costly due to expensive out-of-pocket fees for the patient and can eventually lead to “shock” claims that impact the employer’s bottom line later. In addition, the absence of proper care leads to greater absenteeism and presenteeism, which lead to lost productivity and lost profits.
Add voluntary benefits to increase the value of a health plan
As mentioned, health savings accounts (HSAs) allow eligible individuals (or any other person, including an employer or a family member, on behalf of an eligible individual) to set aside money to pay for qualified medical expenses such as deductibles, copayments, coinsurance, and other expenses. Combining this benefit with a HDHP helps many employer’s lower overall health care costs. An HSA is a tax-exempt trust or custodial account set up with a qualified HSA trustee to pay or reimburse certain medical expenses incurred. But for those HDHPs where an HSA is not funded, meaning no tax-exempt or custodial account exists for that individual, employees can add voluntary benefits to enhance their health plans.
Hospital indemnity, critical illness coverage, and direct primary care (DPC) are three key benefits that can be layered alongside an HDHP plan to make it more beneficial and provide first-dollar savings. Also, if an employer is funding an HSA on behalf of their employees, consider switching to an HRA which does not have the first-dollar limitations of a funded HSA. Simply put, if the HDHP is the trunk of your health plan tree, think of these benefits as the branches that make it fruitful.
By incorporating direct primary care, employee’s everyday primary care expenses are no longer a high out-of-pocket cost but are diverted towards the membership for minimal out-of-pocket costs. Instead of being nickel-and-dimed until they meet a deductible, employees can access a primary care provider for a low monthly membership fee. Most DPC plans offer little-to-no visit fees for doctor visits or telemedicine. Having affordable access to primary care leads to more favorable health outcomes by allowing people to be proactive about their health.
Annual physicals, immunizations and other screenings are just a few of the essential primary care services that help maintain optimal health. DPC has also been a game-changer for managing chronic diseases affordably. Employees without an HSA can keep their families healthy from day to day and still engage their critical illness, indemnity plans, or HDHP coverage for catastrophic events.
Communication empowers your clients to succeed
Open enrollment is the perfect time to reboot (or at least re-think) how clients are implementing HDHP programs. If employers are utilizing a HDHP that does not fund an HSA, layering gap solutions into existing benefit plans is a tried and true practice that utilizes first-dollar savings to offset out-of-pocket costs, diminishing the financial impact of a high deductible.
Whatever combination is chosen, it’s not enough to build a solid health plan if employees don’t understand the benefits or how to use it effectively. Benefits brokers must take the time to ensure clients understand how each element of a health plan can work together to provide the best path to care. Employers must also invest time to educate staff on the most beneficial ways to use the available offerings.
When implementing a creative plan design, employee education is key to the success of the plan. It’s ideal for employers to review benefits with their employees on a quarterly basis, rather than just annually at open enrollment. As turnover happens, employees experience life changes, or the staff gets busy with life and work, people tend to forget how to engage with their health plan properly. To keep employees educated, ask the organizations participating in the health plan for educational materials. Employers can use these materials in drip campaigns to keep staff engaged with their health and well-being. By helping clients keep their team abreast of the wealth of resources available to them, you empower them to protect their bottom line by using their creative HDHP plan efficiently.
Andy Bonner is the CEO/Co-Founder of Healthcare2U, an integrated, hybrid direct primary care organization.