Benchmark Friday: High-deductible health plans
March 28, 2008 by Jennifer AzaraPosted in: Benchmarking, Benefits, Healthcare, Latest news & views
Perhaps other top execs in your company fear a full-scale riot from employees if you implement a high-deductible healthcare plan. Not a good enough reason to shy away from one of the only things to help stop the bleeding from hobbling healthcare costs.
Share these important benchmarks:
• In 2007, 15% of privately-insured U.S. citizens are enrolled in health care plans with deductibles higher than $1,000
• By 2020, that percentage is expected to climb to up to 60%.
Those stats come courtesy of Spencer’s Benefits Reports.
It’s a matter of survival. Even with the modest 6% price increase predicted for healthcare costs in 2008, companies just can’t keep pace with a decade of enormous hikes.
If you’re going to go with a high-deductible plan, you want to make sure you have the other piece of the puzzle: a health savings account (HSA).
Easier said than done.
One finance exec we know took a rather dramatic step to overcome the resistance he was running into at his company. Maybe worth considering.
To get employees to sign up for the HSA/high-deductible combo, he dangled a very large carrot: The company agreed to pay the deductible for any employee who was willing to participate. A gamble? For sure. The company was actually hoping to be on the hook for a hefty price tag. But the more people that signed up then, the more they’d ultimately be saving in premiums.
The gamble paid off. Even after footing the bill for the deductibles, the company still would up saving money.
And there was an unexpected benefit: The employees who did sign on then spread the word to those who are on the fence about why it’s a great move.
Tags: Benefits, health savings accounts (HSAs), healthcare costs, metrics
October 20th, 2008 at 3:18 pm
I don’t think so guys. I’ve been handling the insurance for my company for 20 years and ever since HSA’s hit the market I have investigated them and discussed them with agents. They don’t work. The classic HSA based plan winds up saving little or no money compared to a more traditional plan in part because after the deductible is met, prescription drugs are paid in full. Also, the Caf 125 flex plan is drastically limited to expenses not covered by the insurance plan. So, those chiropractor bills that are theoretically covered by insurance (but really aren’t because treatment is almost NEVER medically necessary) can’t be paid from the 125 plan. At our company, utilization is pretty high because of the age of the group. Our employees would be royally screwed under an HSA at no real benefit to the company.
One of the big selling points of the HSA plans is the ability to put money into the HSA account as a long term investment saving for retirement. No one bothers to mention that the funds can only be invested in money markets so the balance won’t grow beyond inflation. Also, many of our employees meet their deductible 2 or 3 times every 5 years. They would wind up using after tax dollars to pay medical expenses that would remain pretax if they had full access to the 125 plan.
Finally, every single agent I have EVER spoken to who extolled the virtues of HSA’s turned out to have a political motivation NOT a cost savings or benefits motivation. Beware.
December 1st, 2008 at 5:33 pm
HSA’s may work differently in different states or between plans. In Illinois, our Blue Cross/Blue Shield HSA plan covers the same procedures as the BC/BS PPO plan and utilitizes the same network. They don’t cover 100% of prescription drugs - just 80% and they do cover chiropractic at the same level as the PPO plan. I’ve used the same doctors and clinics with no co-pay after my deductible of $1,500. My employer paid $1,000 of the deductible and still saved over $1,000 in premiums per employee. I saved $720 in my portion of the premium. It sure adds up for a company of just 100 people —Employers saves $100,000 and employees each have $720 more in their paycheck. Perhaps all HSA plans are not the same and deserve another look.