High Deductible health plan?

A High Deductible health plan is usually designed to work with a Health Savings Account (HSA) or a Health Reimbursement Account (HRA) as part of what is called a Consumer Driven Health Plan (CDHP). There are other names, but these are the most common.

The employer provides the HRA or HSA (most of the time putting money in it for the employee, say $500 - $1000 for the year) that the employee is allowed to "spend" and ration their costs.

HSA = this offers tax savings to the employee if they contribute their own money to it and does not have to be used in the same year it is deposited. The disadvantage to an employer who contributes money to it is that this money is the employee's and they can leave with it.

HRA = This is a reiumbursement account and the benefit to the employee (unlike a flex account) is that this money can accumulate and roll-over and doesn't have to be used all in one year (in most companies).

HSA/HRA/FSA = if you are familiar with flexible spending accounts (medical reimbursement accounts), you essentially get a better tax benefit using the HSA, so you can't do both the HSA and FSA. You can, however, do both the HRA and FSA together.

Basically, the intent of these plans is to eliminate co-pay's and have employees bear the entire cost of the doctor visit and prescription so they will be more cost conscious. Most people will see that as a downfall, but you have to keep in mind the reasons for doing this.

I often listen to employees complain about how expensive insurance is, yet unfortunately the ones who complain the loudest are often (not always) the ones who abuse the benefit and make no effort at helping to control the very costs they complain about...

REASON 1:
Employer's have created an "entitlement mentality" with employee's that their insurance will be provided by their employer. In doing so (& until recently) they've failed to educate employee's on the true cost of health plans until it was out of control.

REASON 2:
As employees, we've also failed to educate ourselves about health insurance and the actual costs because we pay co-pay's and partial premiums... and because no one ever told us we had to! But if all of us paid as much attention to the TRUE and total cost of our healthcare as we did to our deductible on our car insurance, we'd be so much better off!!!

Honestly, if we put as much diligence into shopping our health insurance, our doctor, our hospital's, what the total cost of each procedure would be... and we held the medical community more accountable for what they charge us - yes it would be more work, but just because you put effort into finding the best price doesn't mean you sacrifice quality! (and obviously I'm talking outside the scope of true emergency and trauma situations)

We quality/price shop for homes, for cars, for clothes, electronics, etc... but we can't do the same for our health care and then we scratch our head and can't understand why we essentially get raped on the cost?

How many of us have EVER taken our child (or ourselves) to the ER or the doctor because we have insurance and we'd rather be safe than sorry???? (mmmm... guilty! Raising my hand!) But if we thought about the fact the ER trip was $1K and then the ER doc gives you some tylenol and says to go to your regular doc the next day anyway... I mean... seriously?

How many people know there are Nurse Hotlines (800 #'s) available in in which you can talk to a nurse 24/7 and find out if you really do need to go to the doctor or not? I've worn ours out for myself and my daughter and probably saved myself and the insurance plan thousands! Just little ole me... saving thousands!

How many of us get the more expensive drug because we are willing to suck up the higher co-pay, yet we don't realize that the cost difference in that one prescription is $1000 and we fill it once a month for a year, so that's a $12,000 hickey to the health plan just because we wanted name brand instead of generic? (Yes, I know, some people legitimately need it... but plenty don't) And what if you have a few thousand employees? Maybe only a handful of employee's do it (maybe 10), but it may still mean the difference of $100,000 to what the employer is paying on the health plan in one year... for TEN employee's?

REASON 3:
Insurance companies, networks, and doctors... we create the networks to give employee's a "discount" in their cost, so the doctor's raise their prices to offset the discount... and those that are private pay often don't know that they can negotiate with their doctor to pay the disounted price and get hit with the full price! We all know the cost of malpractice insurance and medical research plays a price in overall medical costs, but in general... there are a lot of pieces to this puzzle...

Employers/employees can help here by making the health institutions aware that we are cost conscious and quality shopping for our health care!

It's not an overnight, instant fix - but we didn't get in this situation overnight either. When my organization rolled out the Consumer Driven Health Plan with an HRA option through BCBS as the first employer in the state to do so in 04 - we still offered traditional health plans (HMO & PPO), but launched extensive education for CDHP as an alternative to our employees - but we didn't force them to them use it. Our health plan costs were increasing by almost as much as 20% each year and by offering this type of health plan and EDUCATING our employees, the rate at which our premiums were increasing did start going down after only one year.

I have been on the front line as the person with the bill in hand... trying to help the my employer figure out a way to offer the best benefits possible to their employees, despite spiraling costs... and trying to help find ways to help the employee pay for it...