For Immediate Release:
Dateline: Nashville,
TN
Monday, December 2, 2013
Let?s Get Real World- Company ABC has seen increases in their group health insurance of 10% up to 30% over the last 5 years. The renewal for 2014 is no different, a across the board increase of 18%. For more than 20 years ABC Company has tried to keep quality benefits for their employees, low deductibles, low physician co-pays and prescription co-pays, but this increase is too much, they have to make some changes.Sound familiar? This scenario is being played out every day at some company. After years of increases the end has been reached. Enter the High Deductible Health Plan with a Healthcare Savings Account. When employees are first introduced to the High Deductible Health Plan (HDHP) their first reaction is ?What, this is not insurance, this is a joke man!? this reaction may also be accompanied by expletives that cannot be reprinted in this article. HDHP plans are what have traditionally been referred to as ?Major Medical? plans. There are no physician co-pays or prescription co-pays, so the insured has to pay those costs until the deductible is reached. Once the deductible has been reached the insured pays a co-insurance amount, if any, until the total out of pocket has been reached. HDHP plans will cover one annual wellness visit without co-pay or deductible as mandated by the Affordable Care Act.What makes HDHP plans different from the old ?Major Medical? plan is the ability to open a Healthcare Savings Account (H.S.A.). The H.S.A. is a bank account specifically designed allowing money to be saved to pay medical expenses. The tax laws are very favorable to H.S.A. accounts.- The money put into H.S.A. accounts is tax exempt.
- The interest earned on H.S.A. money is tax exempt.
- Withdrawals to pay for allowable medical expenses are tax exempt.
- Any money left in the account at the end of the year can be carried over to the next year.
- Anyone can deposit money into the account on behalf of the employee.
- At age 65 the account works like an I.R.A. or 401K account.
- While there is an annual contribution limit, there is no limit on the total amount you can save in an H.S.A. account.
The reported growth in H.S.A. accounts is only a reflection of the growth in HDHP plans companies are transitioning too in an effort to control costs. If you are going to introduce a HDHP plan with an H.S.A. here are three recommendations. - Start early ? There is a steep learning curve to transition from a traditional PPO plan to a HDHP plan. Have multiple employee meetings and give time for questions.
- Know the details ? It is important to be able to give the specifics of how the plan works and how much the employee will be liable.
- Give real world scenario?s ? Many individuals are pre-programmed to believe they cannot understand insurance, so they do not even try. However many of these individuals can understand real world examples. Examples like ?What happens if I go to the hospital?? or ?What happens if I go to the doctor?? are very helpful.
Many times the process of educating employees is better accomplished by someone outside the organization. Your broker may or may not be a good educator so be careful assuming they can get employees to understand the concept and application. It is critical that the concept and application be explained in non-insurance terms.My experience has been working with employers is that most confusion and unhappiness with HDHP plans and H.S.A. accounts can be directly traced to employee?s not understanding how the plans work and how to utilize them to their advantage.If you have questions about how to implement and educate employees on the application of HDHP plans with H.S.A. accounts give me a call at 615-542-1919 or contact me at gary@illuminaregroupinc.com.
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