Employees that choose the plan that is best for them
Employees will be able to make a decision on how to use the defined cash contribution and choose the insurance plan they want. Here are the employee options:
- Keep default health plan and deposit money into a health savings account. Employee can keep the default health plan and then put any defined contribution into the health savings account. Employee can also payroll deduct additional money into the HSAs to maximize growth of money for future expenses.
- Use money to pay an additional premium. Employee can select one of the optional plans, and pay the additional premium to for a traditional plan with a lower deductible and low office visit and prescription drug copays.
Here are two very important considerations:
- Consideration 1: A health plan that benefits people with ongoing expenses will be quite different from a health plan the benefits healthy employees.
- Employees with ongoing conditions want features such as a low deductible and low office visit and prescription copays to keep their costs low when they access the healthcare system. These plans are more expensive because they pay more of the bills.
- Healthy employees, who seldom access the healthcare system, rarely benefit from the more expensive traditional silver, gold or platinum plans. They benefit more by leveraging their good health, not paying additional premiums, and instead putting that money in an HSA to pay for future expenses. They benefit more by payroll deducting additional money to plan and save for the future including retirement healthcare expenses.
- Consideration 2: Employees often don’t know how much they spend on medical care during a given year. In fact, they often over estimate how much they spend on healthcare because they pay “negotiated fees” that are not known until they receive the Explanation of Benefits (EOB). When employees review the Explanation of Benefits form they receive in the mail (or view online), and actually compute their total allowable expenses, they are often be surprised at how little they spend each year. Healthy employees will then see logic of the HSA-based plan while employees with ongoing conditions and expensive brand name drugs will gravitate towards more expensive plans that offer low prescription copays.