What Employers Need to Know About the Hottest Trend In Health Insurance
There are a number of industry trends employers should be aware of in preparation for open enrollment. Of those trends, there’s one that continues to rise in popularity: consumer-driven healthcare plans (CDHPs).
In fact, last year, offerings of consumer-driven healthcare plans jumped from 39 percent to 48 percent among employers with 500 or more employees, according to Mercer’s National Survey of Employer-Sponsored Health Plans.
Consumer-driven healthcare options typically include high-deductible health plans (HDHPs) and health savings accounts (HSAs). For employers, a higher deductible means employees are responsible for a greater amount of their initial healthcare costs. For their employees, the benefit comes in lower monthly premiums.
What’s more, employees who have a high-deductible plan are eligible for health savings accounts. These accounts allow employees to save money, tax-free, for medical expenses. HSAs help employees meet the deductible or, if they remain healthy, can lead to considerable pre-tax savings -- especially when employers contribute to those accounts.
The rise of CDHPs.
Why is the market moving in this direction? For starters, high-deductible plans are attractive to employers because it means managing less of the insurance cost. On the employee side, both high-deductible health plans and health savings accounts encourage employees to be more mindful about their health and more involved in making decisions for the best-value care.
This rise in popularity may also be in an effort to prepare for the “Cadillac” tax, an excise tax scheduled to take effect in 2018 to reduce healthcare usage and costs by imposing a 40 percent excise tax on the value of health insurance benefits that surpass a certain threshold ($10,200 for individuals and $27,500 for families).
How to make the shift.
As more employers include high-deductible health plans and health savings accounts in their list of plan options, it’s important to make the shift smooth for employees. Here are three steps employers should take when shifting to consumer-driven healthcare options:
1. Educate employees.
With only 20 percent of the 5,209 employees surveyed in Aflac’s 2014 WorkForces Report saying they had enough information to prepare them to select benefits, it’s crucial that employers keep employees in the loop -- especially when changes are made to their plans.
Help employees better understand their benefits with the following:
Hold meetings, seminars, and other such events to keep employees informed and up-to-date.
Invite family members to take part in after-work benefit fairs, as healthcare concerns the entire family.
Bring in a third-party expert to help employees understand their health plans and make more informed decisions.
2. Embrace transparency.
Like many healthcare options, there are pros and cons to high-deductible health plans. When shifting to consumer-driven health options, be open and honest about what that shift will mean for employees.
Encourage employees to ask themselves whether they can pay for all medical expenses until the deductible is met, whether they can afford the out-of-pocket maximum, etc. Help them make more informed decisions. If a high-deductible plan is all that’s being offered, consider making the plan more attractive by contributing or matching employee contributions to their HSAs.
3. Streamline open enrollment.
When it comes to streamlining the open enrollment process for employers and their employees, modern enrollment technology is a must. Automating the open enrollment process not only saves valuable time for all parties involved, it makes it simple for employees to learn about and manage their benefits, at anyplace and at any time.
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