Even this early in open enrollment, some clear trends are surfacing. HDHPs are on the rise. More and more employers are offerings these health plans.
What is causing this shift and why are companies embracing high deductible health plans? We will cover both the value and rationale for the movement to HDHPs.
HDHPs are Cheaper
HDHPs are cheaper for employers. Employers are always looking for ways to keep benefits stable and lower costs. This helps employers stay competitive in a robust job market and save money at the same time. So how much money are employers really savings? A recent study from Mercer showed larger employers are paying an average of $84 per month for HDHPs, compared to $132 a month for a traditional PPOs, per employee. As more employees more to HDHPs, the result is a 37% savings per employee. The larger the company the more total savings.
HDHPs are cheaper for employees. HDHPs offer lower premium costs than traditional plans like PPOs and HMO. How much less do they cost? That will vary by plan type, but we have seen nearly 40% savings premiums savings when comparing HDHPs to PPOs.
HDHPs are More Flexible
You now know that HDHPs save money. But what about your healthcare experience? In fact, HDHPs offer more flexibility when it comes to coverage options. Generally speaking, HDHPs offer fewer restrictions than HMOs, so you can go to the service provider you want. HDHPs help remove the red tape from your healthcare options.
They do however have higher out-of-pocket health cost. What (or should) you do about that? Read on to find out.
HDHPs Offer Extra-Saving Options
HDHPs are the only HSA-eligible health plan. With an HDHP, you can add an HSA (health savings account) to save even more. HSAs create:
- Tax-free saving, investing and spending for healthcare costs.
- Year over year healthcare funds. Your HSAs never expires. You own it and can take it with you from job to job and provider to provider.
- An extra retirement account – After the age of 65, you can use your HSA funds just like a 401(k) or IRA.
Your HSA funds are yours for life. Each year you might select a new health plan, but not a new HSA. It’s nice to have that stability in an ever-changing healthcare market.
High Deductible Health Plan FAQs
- HDHP Overview
- High Deductible Health Plan Benefits
- Expected HDHP Expenses
- Moving From a PPO/HMO to an HDHP
HDHPs are Now the Normal
No one wants to lead the pack when it comes to changing benefits options. Employers fear backlash and a drop in employee satisfaction. We have good news. More than 9 in 10 employers expect to offer high-deductible plans in 2019.
Adding an HDHP is no longer the bleeding edge, it is expected. HDHPs are cheaper for employers and employees. Based on healthcare costs, we only expect this trend to continue. More employees will adopt an HDHP this year than last year, will you be one of them?
Disclaimer: the content presented in this article are for informational purposes only, and is not, and must not be considered tax, investment, legal, accounting or financial planning advice, nor a recommendation as to a specific course of action. Investors should consult all available information, including fund prospectuses, and consult with appropriate tax, investment, accounting, legal, and accounting professionals, as appropriate, before making any investment or utilizing any financial planning strategy.