Sponsored Content

Time to Consider A High-deductible Health Plan

Employers looking for ways to contain health insurance costs are finding High-deductible Health Plans (HDHPs) increasingly attractive. Businesses are often able to reduce their members’ premiums with HDHPs. An HDHP also offers employees an opportunity to save, with the addition of a Health Savings Account (HSA).

An HDHP covers only preventive care until the plan’s deductible is met. And although the deductibles are high, the monthly premium is typically lower than for traditional health insurance plans with lower deductibles. Pair an HDHP with an HSA, and employee savings advantages can be great.

An HSA is like a personal savings account, but the money is used only for qualified health care expenses. Established in 2003 as part of the Medicare Prescription Drug, Improvement, and Modernization Act, HSAs allow people with HDHPs to pay for current health care expenses and save for future expenses on a tax-favored basis. Participants can use funds from the accounts to pay for all or part of the expenses not covered by the HDHP. Additionally, an HSA is portable, going with the employee after a change in employment.

What are the advantages for employers?

Satisfaction may rise among employees who choose an HDHP with HSA over a traditional health plan, especially if they feel they lose money on unused, traditional health insurance. An HDHP with HSA may also shift more responsibility to employees when it comes to seeking health care services. They may have second thoughts about visiting out-of-network providers or seeking health services that could be avoidable, deferrable or unnecessary.

Employers moving to an HDHP can choose to make contributions into the employee’s HSA — allowing members to have more funds available to use for health care expenditures if the need arises. This could be an effective recruiting and retention tool for employers.

IRS HSA contribution limits and HDHP deductibles for 2018

The IRS recently announced the calendar-year, 2018, inflation-adjusted amounts for HSAs: The annual limit on deductible contributions to an HSA for individual (self only) coverage under an HDHP will be $3,450. The annual limit on deductible contributions to an HSA for family coverage under a HDHP will be $6,900.

The IRS 2018 definition of a HDHP is a health plan with an annual deductible that is not less than $1,350 for self-only coverage or $2,700 for family coverage. The annual, out-of-pocket expenses (deductibles, copayments, and other amounts, but not premiums) may not exceed $6,650 for self-only coverage or $13,300 for family coverage.

Bottom line

Depending on their health care needs and those of their families, employees may realize more savings with a HDHP over a traditional health plan. And your company could realize savings, too.