Good health begins with oneself. It seems more fitting, therefore, that the person who is of the utmost control bear the responsibility for best directing their own health care dollars. Consumer-directed health plans are not new; large companies such as Whole Foods Market offer a similar type of plan to their employees. These types of health plans are centered on much higher annual deductibles with lower monthly premiums and switch the focus of health care from treatment to prevention.
The cornerstone of the consumer-directed health plan is the larger annual deductible. Notably higher than traditional insurance plans, deductibles in consumer-directed plans can range between $1,200 and $2,400, with the former being for single employees and the latter for families. Hand-in-hand with the higher deductible is a lower monthly premium. The benefit of these types of plans comes through this higher deductible; when employee/consumer has to carefully consider the frequency with which they are utilizing insurance-paid medical visits and/or treatments, the amount of times the insurance is used is decreased. The patient is forced to better assess the health care visits and procedures that are administered. When the individual bears the burden of paying for their treatments up to their annual deductible, less-and-less unnecessary medical expenditure occurs.
A Kaiser Family Foundation 2009 study found that 22 percent of companies with 200 or more employees were enrolled in high-deductible health care plans. One way companies are sweetening the deal for employees to switch to these types of plans is via the health savings account (HSA). In these accounts employers can deposit tax-free dollars that, serving as an incentive, employees can use to help offset some of the expenses incurred before the higher annual deductible of consumer-directed plans is reached. Between $500 and $1000 in HSA funds are typically offered to employees who make this switch from traditional to high-deductible plan. Roughly $3,000 for an individual and $6,000 for a family can be annually set aside in these HSAs. The employee pays no tax on the amount it contributes and no tax is paid on withdrawals used for approved health care costs. Not all companies offer HSAs but people enrolled in high-deductible health plans can often set one up on their own. Visiting www.treas.gov/offices/public-affairs/hsa/faq_setup.shtml is a good resource for consumers interested in starting their own HSA.
HSAs, including employer contributions, stay with a person even if they change companies, and amounts saved roll over to the next year. The Health Reimbursement Arrangement is similar to an HSA but you usually cannot roll over funds to new jobs or new years. In these situations the employee is usually already enrolled in a high-deductible health plan and the employer can offer a certain amount to each employee to be used for certain health care expenses.
When employee deductibles are higher, less unnecessary health treatments are procured. The focus on staying healthy, avoiding illness out of better prevention occurs when employees are faced with larger deductibles and more initial out-of-pocket health care expenses. Many high-deductible plans offer free or very-low-cost preventative procedures such as weight loss/diet programs and smoking cessation classes. Many employers are asking their employees to switch to these types of consumer-directed health care plans that simultaneously offer many incentives, via HSAs and health reimbursement arrangements, in addition to reduced monthly premiums for companies and individual employees/consumers.
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Tags: consumer directed health plans, deductibles, employer, health insurance plans, health savings account (HSA), HR, traditional insurance plans
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