...
The cornerstone of consumer-driven health care is the consumer. For decades, individuals, many of who were employees in a group health plan, were not part of the equation. In fact, plans were designed in ways that shielded individuals from cost information of health care. People paid their deductible and their co-pays without ever realizing the true costs incurred. Now that many people have gotten accustomed to $15 co-pays, many companies have seen fit to turn the tide and help make employees aware of the true costs of health care.
Scope
Employees with health care insurance benefits are impacted.
Regulatory citations
- None
Key definitions
- None
Summary of requirements
One tool employers are using to help employees see the true costs of health care are plans that involve the individual as a consumer, known as consumer-driven health plans (CDHPs). These types of plans generally involve a high deductible health plan (HDHP) along with a Health Savings Account (HSA) or a Health Reimbursement Arrangement (HRA). There can also be supplemental plans that fill in gaps between account balances and the deductible.
With these types of plans, the individual/consumer is in control of paying for their health care, putting them in the driver’s seat. The plans generally accumulate funds for paying medical costs, and the consumer has the option of which medical usage they would like to have, depending on how much is in their individual accounts. The accounts accumulate over the years — there are no use it or lose it elements.
In considering if these types of plans are right for your employee population, it may help to note that they work best for younger, healthier individuals who can take some time to build up their funds. If you have an older, or less healthy employee population, such a plan may not be as well received. CDHPs also appear to favor individuals who are in a financial situation in which they can allocate appropriate amounts of funds to pay for medical care.
Benefits of such plans include the low premiums paid for coverage. Despite the plan having high deductible, low premiums may help individuals put more of their income into their medical accounts. Another benefit, as was discussed earlier, is that such plans are designed to help individuals become very savvy medical consumers. Perhaps they feel they won’t need to run to the doctor for every sniffle, but rather, turn to online information or nurse hotlines for information. In addition, such accounts are tax-exempt.
Some CDHPs are set up such that preventive care is funded separately to avoid having individuals forego such care and risk missing early detection.
CDHPs do require a high level of communication to plan participants. Many individuals are not well versed in medical information, and they will need this in order to make wise medical choices. Consumers will need to understand how the plans work, what their short term and long term costs may include, and who they can turn to for assistance.