| Over the past few years, increasingly more employers | | | | experience cost savings of up to 25% to 30% by |
| are turning to a consumer driven health plan (CDHP) to | | | | switching to CDHPs. HRA and HSA accounts help to |
| combat the rising cost of health care. CDHPs have | | | | keep employer costs predictable in the long run by |
| become increasingly popular, surpassing HMOs to | | | | maintaining benefit levels as long as employers take |
| become the second most popular plan design (behind | | | | the savings and set them aside to stabilize unknown |
| PPOs). A 2010 Mercer National Survey of | | | | future costs. |
| employer-sponsored health plans found that 15% of | | | | Making CDHPs Work |
| small employers offered CDHPs in 2009, up from 9% | | | | CDHPs require a culture change to be truly effective. |
| in 2008. The increase is a direct result of smaller | | | | Employees need to take an active role in finding the |
| employers using the cost savings inherent in CDHPs to | | | | location where they get the best and most service for |
| reduce their overall healthcare costs. The Mercer | | | | their healthcare dollars. In an article written by Bruce |
| National Survey also found that 46% of all employers | | | | Shutan for the United Benefit Advisors, Gerald L. |
| expect to offer CDHPs over the next five years. | | | | Staten, senior vice president for Leonard Insurance |
| How CDHPs Function | | | | Services argues that "people with auto insurance don't |
| The CDHP model is designed to encourage | | | | expect that their annual deductible will cover oil |
| employees to make more informed and cost efficient | | | | changes, so why should it be any different with health |
| decisions regarding their health care and to let the | | | | insurance?" Staten argues that employees must be |
| individual decide how their healthcare dollars are spent. | | | | willing to pay for small amounts of healthcare costs |
| Consumer driven health plans work by combining a | | | | out of pocket for office visits and prescription drugs. |
| high deductible health insurance plan with a tax | | | | Many clever consumers with CDHPs have noticed |
| advantaged spending account (typically a Health | | | | and taken advantage of the disparity in the pricing of |
| Reimbursement Arrangement or Health Savings | | | | healthcare services. For example, when one man |
| Account) to help pay for the high deductible of the | | | | needed to get a CAT scan but didn't want to pay his |
| health plan. An HRA or HSA allows the employee to | | | | annual deductible of $6000, he shopped around to |
| leverage tax-free dollars for the use of their health | | | | check the prices of the procedure at different offices. |
| care. CDHPs help to promote healthy living and | | | | He received three quotes ($750, $1050 and $1950) for |
| wellness, and also reveal the true cost of healthcare to | | | | the procedure and was able to bargain down the first |
| consumers who have long been insulated from the | | | | quote to $500. If employees can effectively handle the |
| actual costs. | | | | money contributed by their employer, they may not |
| One of the results of CDHPs is lower premium costs | | | | have to spend any of their own. |
| which employers can take the savings from and apply | | | | If you would like to hear more about our HSA or HRA |
| to an HRA or HSA plan for employees to cover the | | | | administration, call 1-800-444-1922 ext. 3. |
| cost of higher deductibles. Some employers have | | | | You may also request a proposal by clicking here. |