As insurance costs continue to climb, many employers have begun to offer high-deductible insurance plans. Some have even decided to drop their other plans and make high deductibles their single choice. According to the Kaiser Family Foundation, the number of employees who opted for a high-deductible plan has more than doubled in three years to 19 percent.
These plans have the dual incentive of lower premiums for employers and better healthcare management for employees, who are more reluctant to visit the ER or less likely to agree to endless tests as their share of costs goes up. The goal is to place more responsibility for an employee’s health on the employee. This is why virtually all of these plans include full coverage for preventive care. Employees pay no deductibles for physicals or cancer screenings. Many also include cash incentives for employees and family members who take health assessments or undergo counseling sessions with a nutritionist or other licensed heath advisor. And most cover generics over brand-name drugs.
According to benefits consultant Mercer, employers like these plans because they’re about 20 percent cheaper than conventional PPOs. A high-deductible plan with an HSA runs about $7,800 annually per employee. A PPO can be upwards of $10,000. "If we're not already at the tipping point for consumer-directed health plans—and we may well be—at this rate of growth it's coming soon," said Laura Baker, a senior health and benefits consultant for Mercer in Los Angeles.
High-deductible plans are often dovetailed with health savings accounts (HSAs), where pre-tax dollars cover the deductible and other medical costs. Some companies will contribute to an employee HSA based on how much an employee earns. For 2013, individuals can contribute up $3,250 to an HSA; families can contribute up to $6,450. Monies not used at year’s end stay in the account to earn interest or be invested. And any unused monies can be taken out by employees when they leave the company.
New rules kicking in next year require plans linked to HSAs to have a $1,250 deductible for individuals and $2,500 for families. Some plans pay all medical costs after employees meet their deductible, while others require employees to pay a portion of costs up to a certain cap. Starting in 2013, the maximum out-of-pocket expense will be $6,250 for an individual and $12,500 for families.
Another option offered by some employes is the Health Reimbursement Account (HRA). Here, the employer sets aside a certain sum for each employee, adding bonuses for specific healthy activities—like getting an annual physical. Any unspent monies are kept by the company when the employee leaves.
How are you controlling your employee healthcare costs? Are you offering an HSA, HRA or hybrid? Will you be ready when the new healthcare laws kick in?
Image courtesy of vichie81 / FreeDigitalPhotos.net
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