Although HDHPs have been around a while, they can still cause out-of-pocket sticker shock.
Most employers have dipped their toes in the high-deductible health plan (HDHP) waters, either because they’ve implemented a plan or because they’ve considered it as part of their benefit offerings; 29% of covered workers are enrolled in HDHPs with savings options, up from 4% in 2006.1
The goals of implementing this type of medical savings plan are twofold. First, these plans usually provide a much-needed premium savings. Second, HDHPs are designed to encourage consumerism and motivate employees to make more cost-conscious choices. For example, using urgent care over the emergency room when appropriate.
Unfortunately, high deductible health plans may also have some unintended consequences. Think about the employee who is struggling financially and perhaps even living paycheck to paycheck. Facing the reality of plunking down $100-$200 or more for a sick visit at the primary care doctor’s office or urgent care facility may preclude them from seeking care.
An untreated illness could become more severe and potentially lead to a hospitalization and lost productivity due to additional time off from work. Then of course, there is the sticker shock that often accompanies the visit to the pharmacy.
Paying a $15 or $20 copay is no big deal. But with an HDHP, the employee may choose not to fill the prescription at all, including medications to manage chronic conditions.
Impact on Health & Wellness Programs
Health & wellness programs are often offered as a complement to HDHPs. Encouraging preventive care is frequently a core component of a disease management and wellness program. However, sometimes employees forget that preventive services are included in the health & welfare benefits plan without any associated out-of-pocket costs.
Assuming the provisions of the Affordable Care Act (ACA) remain in place at least for the foreseeable future, adult annual physicals and age-appropriate screenings, such as mammography and the dreaded colonoscopy, are covered in full as long as the employee uses an in-network provider. When feasible, an employer may also consider adding a prescription drug tier with zero copay for certain maintenance medications, thereby eliminating the financial barrier and allowing employees to better manage their chronic conditions.
Budgeting for Medical Expenses
So, how can employers help plan participants manage the financial equation of HDHPs that are clearly here to stay? One suggestion is to propose they prepare a medical expense budget (i.e., quarterly sick visits to primary care physicians, cost of maintenance medication, etc.). Providing a worksheet to estimate annual out-of-pocket expenses can be helpful, perhaps with common examples included.
Some employers partially fund the deductible with a contribution to a health savings account (HSA). When possible, the employee should consider allocating a portion of their pay toward the remaining deductible amount. This will ease the worry of not having funds to cover the deductible, and any unused funds rollover. By contributing to an HSA, the employee gets an immediate tax savings and builds up a fund to use as needed. In the event there is a medical expense that exceeds the balance in the account, encourage employees to request a payment plan equal to their HSA contribution. When the contribution goes in, they can then make the payment. Most medical providers are open to these types of arrangements. Consider a communications campaign to explain the functions of an HSA.
Encourage Employees to Become Educated Consumers
Employees are generally not thinking about their health & welfare benefits every day and need to be reminded of the value of becoming an educated consumer when they do use their benefits. Direct employees to carrier cost estimator tools for everything from MRIs to prescription drug costs. Many carrier websites provide instructional videos to demonstrate how these features work. Send the links out on a proactive basis or consider offering a healthy lunch-and-learn to discuss these resources.
Lower-Cost Healthcare Options
With any health plan there are a number of ways to save money. Encourage employees to use lower-cost healthcare options such as:
- Generic drugs over brand-name when possible
- Mail-order prescriptions for management drugs
- In-network/preferred providers versus out-of-network
- Telemedicine, if available
Take the opportunity to remind employees about these lower-cost healthcare options frequently.
Leverage Employee Advocacy
Even with the best efforts to educate employees, it may be difficult for them to absorb all the information. Direct employees to an employee advocacy team if it’s available. These experienced health & welfare benefits professionals can assist with research and provide meaningful suggestions to help employees get the most out of their plan for the least cost.
Managing medical costs will likely remain a challenge for both employers and employees so it is important to stay informed as new cost transparency tools become available and to constantly educate employees so they can make informed choices that are also affordable for them.
1 Kaiser Family Foundation, “2016 Employer Health Benefits Survey: Section Five: Market Shares of Health Plans.”
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© 2017 Corporate Synergies Group, LLC. No part of this material may be republished or distributed without prior written consent.