Consumer Driven Health Plan Options

In recent years, the news media, government agencies, many insurers, and insurance industry trade publications have encouraged consumer involvement as a key to controlling increases in health insurance costs. Certainly, there are many versions of “consumer directed” plans in the marketplace, and additional plans continue to be introduced almost monthly.

Benefit Strategies is examining and monitoring these consumer directed programs on an ongoing basis. As with all new programs/concepts, caution must be exercised. We recognize the potential of three major programs in this vital area of our industry.

HEALTH REIMBURSEMENT ARRANGEMENTS (HRA)

These plans provide a great deal of flexibility for employers, which is one of the most appealing factors of HRA's. Employers have many options including the use of a high deductible health plan, increasing employee out of pocket expense maximums, limiting benefits in the base health plan, etc. An employer then establishes a medical reimbursement plan wherein employees submit claims for reimbursable expenses to the employer or HRA plan administrator. The plan document (a necessary ingredient in an HRA) can be designed in a myriad of ways and clearly sets forth the parameters of the plan. Benefit Strategies can provide expert guidance to employers interested in implementing an HRA.

HEALTH SAVINGS ACCOUNTS (HSA)

A number of insurers and administrators have designed a variety of plans meeting the regulatory guidelines for HSA plans. Basically, a high deductible health plan is coupled with a tax-deferred savings account, which can be funded by the employer and/or employee. The legislative intent is that the savings account are available as a long-term, tax-deferred savings vehicle or for use in offsetting unexpectedly higher out of pocket expenses that may arise as a result of the high deductible health plan. Since the savings account belongs to the employee, theories have led some to believe that HSA-covered insureds should more responsibly access the health care system. The HSA concept continues to evolve, and it may be a good fit for some employers; however, employers must be aware of and understand all HSA “pros” and “cons”. We have completed thorough due diligence in this area.

RISK TRANSFER PROGRAM (RTP)

Benefit Strategies has access to a creative program, which can be packaged with an underlying health insurance plan to provide purchasing efficiencies not otherwise available. These plans can add a great deal of flexibility to employers willing to “think outside the box”. The RTP ultimately results in premium minimization without eroding the much needed insurance protection that you provide your employees. If available, we suggest that an employer consider an RTP as a method to reduce employee benefit costs in the short term. An RTP may serve as a “first step” for employers looking to engage some degree of consumerism in their health insurance plan.

Based on our research, we feel that one of the above programs will likely provide you with improved purchasing efficiency, but Health Savings Accounts (HSAs) are a “different animal”. Emerging data will continue to provide guidance with respect to the overall effectiveness of consumer driven health plans, however, benefit studies that have been conducted so far on HSA-covered insureds do not reflect positive trends. You can learn more about our professional insights in this area by reviewing an article we have drafted called Consumer Driven Health Plans – The Rest of the Story©.