In the 1990’s, getting decent health insurance through your employer wasn’t unheard of — it was assumed. But back then, healthcare wasn’t nearly as expensive; rates have increased every year for nearly two decades and it’s unlikely they’ll slow down anytime soon.
In order to afford health benefits for employees, many businesses have had to restructure their offerings, causing a rise in the popularity of high deductible health plans (HDHPs). In 2015, nearly one-third of large employers chose to only offer high deductible health plans to employees and over 80 percent added HDHPs to their list of health insurance offerings.
Because HDHPs don’t seem to be going away anytime soon, it’s important that all business owners and employees familiarize themselves with how these plans function.
High Deductible Health Plans: Pros and Cons
High deductible health plans certainly have their pros and cons — and these can vary depending on one’s own unique health situation. As intimidating and stressful as it can be to conduct an in-depth study of health insurance plans, not doing so can cost you and your employees later.
As a business owner, you know that your employees are going to have questions about HDHPs, especially if it’s the only option you are offering. By the time you’re passing the information on to them during open enrollment, you will have had the benefit of already doing the research necessary to add the plan in the first place. Your employees, however, won't be as lucky; they will be playing catch-up, while under deadline. And if it's your goal to have as many employees as possible willingly switch to an HDHP (assuming it's one of multiple plans offered), then it behooves you to educate them on how the plan works.
HDHPs work differently than traditional POS or PPO plans in that all healthcare expenses are paid out-of-pocket until the deductible is met. This can lead some employees to feel like they are spending more money with an HDHP, though that is often times not the case once premium reductions are factored in. Nevertheless, healthcare providers say their biggest concern is that patients will not seek medical treatment because they fear the expense. Which, in turn, causes more extensive issues later on.
- Premiums are typically lower than with POS or PPO plans
- Networks are not necessarily narrowed, as with HMOs
- People who rarely use their health benefits may save money
- If you are not on expensive medications, your monthly bills may be lower
- Out-of-pocket expenses are not the market rate, but the negotiated rate between the healthcare provider and insurance company
- Policyholders can open a health savings account (HSA), which never “expires,” to help cover out-of-pocket expenses
- People managing chronic illnesses find that their out-of-pocket expenses are high
- Prescriptions, office visits, and diagnostic tests are completely out-of-pocket until you reach your deductible
- If you need surgery, you will need to hit your deductible before the insurance company will pay anything
- If your monthly out-of-pocket expenses are high, you aren’t taking full advantage of your HSA
- Your deductible can be quite high (sometimes as much as $13,000 for families)
Health insurance is not a one-size-fits-all item anymore. To help employees navigate through the overwhelming feelings (that can lead to lower morale and productivity) is to engage in and encourage open communication. Employees don’t usually enjoy being “dictated to” as much as they prefer “explanations for,” so if you are switching to HDHPs only, be sure to explain the financial strains of the situation and point out the pros — while acknowledging the cons.
At KBI, we sit down with our clients and go over their healthcare options to help them better understand their options completely so they can choose the healthcare plan that’s right for them. Call us now for a consultation at