Healthcare debates seem to be eternally ripe in the political and benefits space. Costs are increasingly difficult to balance with coverage. Health insurance plans like HDHPs, PPOs, and HMOs all have clear benefits and limitations. Today we will break down the HDHP and why it’s a good option for employers and employees (no matter their age).
A High Deductible Health Plan (HDHP) is a healthcare plan by definition by lower premiums and higher deductibles.
In order for your health insurance plan to be considered a qualifying high deductible health plan in 2018, it must have an annual minimum deductible of $1,350 for individuals and $2,700 for families. In addition, the annual out-of-pocket maximum for 2018 can’t be more than $6,650 for individuals and $13,300 for families.
Why Would You Add to your Healthcare Insurance Offerings or Switch to HDHP?
Great, but the qualifying event won’t help you make a decision to switch (or not switch) to an HDHP. Let’s get to the point. Here is the sequence of market-inspired events:
- Healthcare costs are rising for both employers and employees (faster than inflation actually).
- Many employers can’t remove health insurance from their benefits offering in a competitive job market (and maybe they don’t want to).
- HDHPs offer a clear solution to lower employer health insurance premiums and still offer employer-sponsored health insurance.
In this scenario, employers can keep their benefits offering robust and cut costs. What about employees? They are left exposed to higher out-of-pocket deductibles that can risk more financial vulnerability as yearly health cost rise.
Don’t fret, we have a solution that allows you to reduce your employer premium costs by offering an HDHP and add long-term financial health security that is unavailable with health insurance plans like a PPO or HMO.
Adding an HSA to Round Out an HDHP
There is no question that HDHP can leave employees in a more financially risky position. HSAs mitigate that risk and add the option for long-term tax-free savings and investment. An HSA creates a clear path to save pre-tax dollars to offset any qualified out-of-pocket medical expenses that might accompany an HDHP. On top of that, their triple-tax benefits never expire and employees can save their HSA for years to come. Unlike an FSA, an HSA never expires. The more they save in their HSA, the more employees will have for their health costs for today and well into retirement.
HSAs and HDHPs create an optical coverage and savings balance. Like a 401k, an HSA is one of the few benefits that never expire. Employees are happy. Employers are happy. You don’t have to wait until your next open enrollment to add an HSA. You can add one today!
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.