Small companies everywhere in the United States have been feeling the heat from rising health care cost for several years now. In a recent report published by the Kaiser Family Foundation, premiums for family coverage have gone up by 19 percent since 2012-13 and 55 percent since 2007-08. High deductible health plans (HDHPs) have been gaining momentum as a popular alternative to traditional health plans among employers and employees, but it sure does bring in with it the pros and cons.
Majority of the small company employers are offering an HDHP. In fact, over 29 percent of all employer-sponsored plans are HDHPs, there is no question this growth is in part due to higher healthcare costs.
The Pros of High Deductible Health Plans
Higher deductibles usually mean lower premiums for small companies trying to find ways to cut costs and save. In 2017 alone, the average yearly premium for employer-sponsored family coverage was around $18,000. Premiums for HDHPs are normally on the low-end, with the average yearly cost for family coverage HDHP about $17,000.
HDHPs are mostly good options for young and single employees who are more likely to be healthy and don’t need health coverage for spouses and dependents. However, even if the deductibles for most medical procedures are high, many HDHPs still offer basic preventative services such as annual check-ups, vaccines and generic prescriptions at little to no cost.
The Cons of High Deductible Health Plans
HDHPs are a blessing in disguise to small companies everywhere due to the lower premiums, resulting in immediate savings for both employers and employees. But the problems arise when employees are faced with inevitable, expensive health care overheads and need to pay much more out-of-pocket before the insurance can help.
What should you know when offering High Deductible Health Plans?
While offering an HDHP to workers will likely result in savings for the small business, it is in a way pushing the costs onto the employee, particularly if they’re faced with a serious medical situation. Nevertheless, many advocates of HDHPs argue that they’re for the most part beneficial to both businesses and employees, it just places more responsibility on the employee to make smarter healthcare decisions.
High deductible health plans do shift some of the snowballing cost of health insurance onto employees. The business owner saves on their premium as the employee pays the first few thousand dollars in expenses. The expectation is that the employee has skin in the game and uses their insurance wiser. Price shopping for services is an example of this.
Offering an HSA along with a high deductible health plans helps ease the employee’s financial burden, especially if the business also contributes a monthly or annual amount to the account. Do remember that only two out of five small companies’ employers currently offer an HSA with HDHP, according to WestPac Wealth Partners. Employers should also offer resources to employees on how to best use their HSAs to offset their healthcare costs.
Ultimately, tutoring for your employees is significant so they can make the best decisions when utilizing the insurance options, you provide. If you have a diverse company with employees with different healthcare needs, then it’s best to offer High Deductible Health Plans alongside traditional, lower deductible plans, and then work with them to make the best choice.