ACTION 5 – Employer Education

Knowledge is Power for Employers too!

An Employer has a fiduciary responsibility to act in the employees’ best interest when offering benefits. This means the employer needs to offer plans that benefit both the majority of employees who are healthy, as well as plans that benefit employees with expensive ongoing medical conditions. When employers are more knowledgeable about health insurance, and specifically Health Savings Accounts (HSA’s), they will have a rationale or philosophy for selecting health plans that offer better benefits to all of their employees.

Here are two examples of how greater insurance knowledge can enable employers to better help employees.

• The new gold standard for “employer contribution” may be to fund 100% of the affordable HSA-qualified High Deductible Health Plan (HDHP). This guarantees all employees will be protected from the large, unexpected and infrequent medical bills that can severely damage a family’s finances. No one will have to pay an additional premium to get vital insurance coverage. Paying 100% of the HDHP is roughly equivalent to funding 70% of a Gold plan or 80% of a Silver plan. Employers who want to offer even better benefits should provide an additional “cash contribution” that employees can elect to either put into their HSA or apply to the premium of a more expensive traditional health plan.

• The new gold standard for “employee contribution” might be for employees to take responsibility for their routine and expected medical bills by 1) planning ahead and saving money in a Health Savings Account, or 2) paying an extra premium in order to get low copays. In addition, employees can break their dependence on low copays and low deductibles by payroll deducting additional money into their HSA until they have sufficient funds to pay the out-of-pocket maximum for at least one year, and preferably two to three years. With a sufficient balance in the HSA the employee no longer needs to worry about unforeseen future healthcare costs.

Important Note: Adopting these new standards will encourage employees to figure out their routine and expected bills, and then compute if it is better to put money into an HSA or pay an additional premium for copays. Human nature will always guarantee the employee will choose the plan that is best for their family.

Providing a terrific long-term benefit for your employees

Employers who offer an HSA-based plan and who educate employees on the tremendous benefits of Health Savings Accounts are providing a terrific long-term benefit for their employees.

This HSA-based health plan is ideal for the business owner who may have greater financial resources to maximize HSA funding. This is especially true if there is family coverage, and the employer can double the regular individual contribution limits. And after age 55, the employer can add an additional $2,000 to the HSA for themself and spouse.

Important Note: Since 2004 Hopper Insurance Services has recommended that business owners enroll themselves in HSA-based plans unless there is a mitigating health concern. It is an opportunity for them to test these plans before recommending to employees. For those that took this advice, and had reasonably good health, they should now have a substantial pool of tax-free cash in their HSA for retirement healthcare expenses.