High-deductible Health Plans – Lower Premiums

June 14, 2017
High-deductible Health Plans – Lower Premiums

Employers are finding High-deductible Health Plans (HDHPs) an attractive way to reduce their employees’ health insurance premiums.

An HDHP covers only preventive care UNTIL the plan’s deductible is met. And although deductibles are high, the monthly premium is typically lower than for traditional plans with lower deductibles. Depending on their healthcare needs and those of their families, employees may save money with an HDHP compared to a traditional health plan. And they may save even more by adding a Health Savings Account (HSA).

An HSA is like a personal savings account, but the money is used only for qualified healthcare expenses. HSAs were established in 2003 as part of the Medicare Prescription Drug, Improvement, and Modernization Act. They allow people with HDHPs to pay for current healthcare expenses and save for future expenses on a tax-favored basis. Participants can use funds from the accounts to pay for all or part of the expenses not covered by the HDHP. And an HSA is portable, going with the employee after a change in employment.

Employers can choose to make contributions into the employee’s HSA. Members then have more funds available to use for healthcare if the need arises. This could be an effective recruiting and retention tool for employers.

Employees who choose an HDHP with HSA over a traditional health plan may feel more job-related satisfaction, especially if they feel they lose money on unused traditional health insurance. An HDHP with HSA may also shift more responsibility to employees for seeking healthcare services. They may have second thoughts about using out-of-network providers or seeking services that could be avoided, deferred or are unneeded.