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Blue @ Work

Is it time to offer a high-deductible health plan?

It's not as scary as you think.

When it comes to health insurance benefits, you want your employees to feel good about their options. You also want them to make a well-informed decision, and to know how to properly use the health plan they select. If you are thinking about offering a high-deductible health plan (HDHP), this is especially important. With an HDHP, your employees will need to know if it’s the right choice for their situation, how to fund it, and ultimately, how to use it to their advantage. In short, they’ll need to be smart, active health care consumers.

That’s because HDHPs are part of a growing trend toward consumer-driven health care (CDHC). In a nutshell, these types of plans are really about employees taking charge of their health care finances. Almost 90 percent of large employers External Site will sponsor consumer-driven health plans in 2020, and of that, 64 percent will offer it with other plan options. CDHC, an essential tool in helping to manage rising health care costs, is made up of three components:

  • A high-deductible health insurance plan
  • A funding account
  • Online tools to help make and manage health care decisions

When combined, these three components help your employees get the most out of their health care coverage.

What is an HDHP?

A high-deductible health plan is a health insurance plan with lower monthly premiums and a higher deductible. With an HDHP, your employees are responsible for 100 percent of the cost of health care before meeting their deductible. Certain preventive care services PDF File are covered in full when your employees receive them from an in-network provider. These services may include annual physicals, well-child exams and cancer screenings (like mammograms).

According to Healthcare.gov External Site, the IRS defines an HDHP as any plan with a deductible of at least $1,400 for an individual or $2,800 for a family for 2020. Maximum out-of-pocket expenses can’t be more than $6,900 for an individual or $13,800 for a family.

With an HDHP, employees pay the full cost of services like doctor’s visits, emergency care, and prescriptions until they reach a certain dollar limit — typically the plan deductible or out-of-pocket maximum.

Funding accounts help with budgeting and planning

To offset the deductible, HDHPs are accompanied by a health savings account (HSA), health reimbursement arrangement (HRA) or a flexible spending account (FSA). While each type of account works a bit differently, their overall goal is the same: to help employees proactively budget and plan for health care expenses.

An HSA, for example, is a flexible and versatile tool that can be used strategically to boost savings long-term. Each employee decides how much to contribute annually, as long as it equals or is less than the contribution limit External Site the Internal Revenue Service (IRS) sets for HSAs each year. Money accumulated in the HSA can be used for medical expenses External Site, as well as dental and vision expenses.

With HSAs, experts generally recommend employees set aside more money early on, until they have enough to cover their health plan’s out-of-pocket maximum or deductible. If there is money in the account at the end of a plan year, it carries over. The money in the HSA stays with the employee, regardless of changes in employment, and even in retirement. 

Help your employees with their “what-ifs”

If you decide to provide an HDHP option for your employees, it’s important to have a variety of online tools to help them make informed health care decisions. For example, myWellmark Opens in a new window® provides tools to estimate costs for upcoming procedures. It also tracks costs, like deductibles and out-of-pocket maximums. Employees can even see provider quality scores and read patient reviews. This all goes a long way in helping them make informed choices.

Millennials are more likely to choose HDHPs

Using online tools to make informed health care choices is something millennials are particularly suited for, according to one study External Site. When given a choice, millennials (people born between 1981 and 1996) are twice as likely to choose an HDHP than older employees. There are several reasons HDHPs are popular with millennials, who are:

  • More likely to use health care services less frequently.
  • More comfortable accessing digital tools to take charge of their benefits.
  • More likely to consider cost when making health care decisions, such as seeking the cost of a procedure before receiving care.

What’s more, millennials are also more likely to enroll in HSAs, and nearly doubled their HSA participation External Site between 2017 and 2018.

Since millennials will make up 50 percent of the workforce by 2020, they will have a significant impact on employer benefits. For more comprehensive information, view the Health of America Report® from the Blue Cross® and Blue Shield® Association External Site on millennial health.

Are you ready to offer an HDHP?

With health care shifting to a consumer-driven focus, it’s easy to see why an HDHP may be a good option. These types of plans provide basic coverage without pricey premiums. Packaged with a funding account, employees have the added ability to plan and budget for health-related expenses. However, HDHPs may not fit with every employer group. First, you need to understand the overall health care needs of your workforce and how much your employees are willing to spend on premiums. If their health care needs are minimal and your employees are looking for lower premiums, or they have expressed interest in the tax advantages of a funding account like an HSA, it’s worth considering.

Ultimately, HDHPs are about empowering your employees with the tools they need to make smart choices. And when your employees are smart health care consumers, it improves your bottom line.

How do I know if my employees are ready for an HDHP?

To determine if your employees are ready for an HDHP, visit the Marketing Toolkit Secure Site to download Consumer-Driven Health Care: A Roadmap to Employee Engagement (M-2318143) for a get-started guide.

While you're there, check out the decision guide made just for employees (M-21121). By working through true/false statements, an employee can better understand if an HDHP is the right choice.

If you have questions, reach out to your authorized Wellmark Blue Cross and Blue Shield representative or email us at blueatwork@wellmark.com Send Email.

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