As medical costs continue to rise, many employers have begun transitioning to High Deductible Health Plans (HDHPs). In fact, 83% of large employers in the U.S. planned to offer a consumer-driven health plan in 2016.1 While this transition may feel like a big leap, there are ways to make it easy and effective for both you and your employees.
Ease fears with education
Changing medical plans can cause fear and anxiety with employees. One of the main reasons employees are afraid to transition to an HDHP is because they don’t understand how it works, or how it may benefit them. This roadblock can be solved with intentional, consistent communication. Indiana Senior Account Manager Jason Dillenbeck explains, “The number one mistake I’ve seen during these transitions is a lack of communication. There needs to be transparency through the process, just like any other organization-wide change. You’re treading into territory of fear and anxiety, so the more information you can get to your employees early in the process, the better.”
Do the math
It’s important to walk through how each plan you are offering can work for every employee’s situation. Offering one-on-one consultations or group meetings is a great way to do this. When you start to look at deductibles, co-insurance, office visits, and prescriptions, and do the math, sometimes the HDHP can actually add up to be a better plan.
“There is a huge fear factor when employees hear the words ‘high deductible.’ Many people think they are one accident away from being thousands of dollars out of pocket. However, many people don’t realize they may not spend as much on healthcare as they thought,” said Dillenbeck. “When you put pencil to paper, you may find out that you could be a lot further ahead with an HDHP because you can use the money you save on premiums to contribute to your HSA, which can help you save for those bigger health events.”
Educate employees on how to make the most out of an HDHP
With an HDHP, also known as a Consumer-Driven Health Plan, it’s important your employees understand they have a choice in the care they receive. Because the HDHP has this higher deductible, employees need to understand their part in making financially responsible healthcare decisions.
“An HDHP can help you control your healthcare. Before, I would go to the doctor and not be concerned about the cost of treatment. When we moved to an HDHP, I started looking more closely at doctors and asking how much payment was. I started learning more about benefits so I could make better financial choices,” explained Nevada Strategic Account Manager, Angela Kyle. Another way to help your employees make the most out of an HDHP is to offer a Limited Purpose Flexible Spending Account (LPHFSA) to pay exclusively for eligible vision and dental expenses. “If employees have large expenses for braces or glasses, encourage them to use a LPHFSA to help facilitate these costs. This helps prevent them from using all the money they have saved in their HSAs for eligible medical costs they may incur in the future,” said Dillenbeck.
Offer and promote Health Savings Accounts
“If you promote an HDHP without an HSA, your employees could be at risk for a financial struggle. It’s important to understand how an HSA can help families long-term, and to not look exclusively at immediate premium savings with other types of plans,” said Oklahoma Account Manager, Shawn Parker. Because funds can build over time and employees can update their contributions as needed, HSAs are an attractive option when comparing other types of medical reimbursement accounts. “If employees can save to have their HSA funded to two years’ worth of their max out of pocket, then they have the option to cut back on contributions that year. As they use it for big health events, then they can increase contributions. My family’s HSA contributions ebb and flow with what’s going on in life, and this flexibility is helpful,” said Dillenbeck.
Continue to provide multiple health plan options
Although it may be the most budget-friendly option to have all your employees on an HDHP, it isn’t a one-size-fits-all situation. According to Kyle, “It’s important to continue offering multiple plans because it can create a softer transition to an HDHP later on. I once had an employer begin offering an HDHP, and after three years, new hires were given HDHPs as their only health option. This worked out because new hires weren’t used to any other plan. Eventually, if the employer wanted to, they could phase their entire group to an HDHP because it slowly became more popular.”
Incentivize the switch
One of the best ways to ease the transition to an HDHP is to offer an incentive to employees who choose the plan. An easy way to do this is to contribute to your employees’ HSAs, whether through an annual contribution or matching program.
“Take the difference in cost to you as an employer on your highest plan, and contribute those dollars into your employees’ HSAs on their behalf. This is now their money to use for eligible health expenses. This is very enticing to Millennials because they don’t often go to the doctor, which means they could be leaving dollars on the table,” said Colorado state manager, Jeff McNeilly. Another way to incentivize the switch is by offering supplemental insurance like Accident Only Insurance, Critical Illness Insurance, and Cancer Insurance to help employees meet their deductibles in the case of an unexpected health event.
Employer-paid plans, such as a Group Critical Illness Plan, are another great way to incentivize the switch. Because larger medical events like a heart attack or stroke can be financially devastating, a Critical Illness plan can help ensure your employees are financially protected. Even with voluntary benefits, they can use the savings they have with a lower deductible to pay premiums for these supplemental plans.
Be confident in your decision
If you truly understand the benefits of a High Deductible Health Plan, your employees will start to do so as well. “I’ve had lots of people come back the year after they switched to an HDHP and say, ‘I wish I had done this earlier.’ It can be a tough transition to go from a low deductible to a high deductible plan (even if they weren’t meeting that deductible), but once they took that step, they were happy,” said Marianne Yost, Senior Account Manager in Oregon.
If you’ve recently made the switch to an HDHP or would like assistance transitioning your employees, American Fidelity can help. Our salaried account managers are trained on educating your employees on how all benefits work together to create a well-rounded health coverage plan. Contact your American Fidelity account manager today to discuss a communications strategy for an HDHP.
1 Business Insurance: High-deductible health plans surge in popularity; January 3, 2016.