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Everything You Wanted to Know About High-Deductible Health Plans in 2020 But Were Too Afraid to Ask

It’s the end of another year and another decade, and the healthcare landscape looks completely different than it did 10 years ago. Back then, getting good health insurance from your employer was the norm, and healthcare wasn’t nearly as expensive as it is today. 

As employers continue to restructure their health offerings, high-deductible health plans (HDHPs) have exploded in popularity. From 2007-2019, enrollment in HDHPs increased among adults with employment-based coverage, and enrollment in traditional plans decreased.

The History of High-Deductible Health Plans

The cost of healthcare rose significantly around the year 2000, and since then, family premiums have skyrocketed. Between 2009 and 2013, family and individual premiums each increased by around 78 percent, and experts predict this number will continue to rise. 

As a result, employers started looking for ways to save money, and many picked up HDHPs, thinking it was the best option. For many businesses, the higher the deductible, the lower the premium. However, this placed a financial burden on employees. The number of workers enrolled in employer-sponsored HDHPs was just 8 percent in 2009, but this jumped to 29 percent by 2016. 

What are the Pros and Cons of HDHPs? 

Employees are going to have questions about HDHPs, so you need to educate them on how these plans work.

HDHPs are different than traditional POS or PPO plans in that all healthcare expenses are paid out-of-pocket until the employee meets the deductible. Healthcare providers say their biggest concern is that patients will not seek medical treatment because they fear the expense.

As a result, some doctors are seeing a decrease in primary care visits.

HDHP Pros:

  •           Premiums are typically lower than with POS or PPO plans.
  •           People who rarely use health benefits may save money.
  •           Monthly bills may be lower if you don’t take expensive medications.
  •           Policyholders can open a health savings account (HSA), which never “expires,” to help cover out-of-pocket expenses

HDHP Cons:

  •           High out-of-pocket expenses for people with chronic illnesses.
  •           Prescriptions, office visits, and diagnostic tests are completely out-of-pocket until the employee meets their deductible.
  •           Many lower-income employees cannot afford to properly fund Health Savings Accounts. 
  •           Without adequate savings, unexpected medical costs potentially bankrupt employees. 
  •           Healthcare providers are often unable to fully collect employee’s out-of-pocket responsibility, pushing reimbursement rates higher.
  •           Chronic diseases like diabetes are often left unmanaged resulting in expensive trips to the emergency room and lost productivity at work. 

Should You Offer Your Employees a High-Deductible Health Plan?

High-deductible health plans are most beneficial for populations of fiscally responsible, high-income earners, who have low to moderate utilization (they are healthy). 

Businesses that meet this criteria should offer at least one traditional health plan along-side the high-deductible option. Doing this, allows employees to decide what’s best for them based on their individual risk-tolerance, budget, and needs.

It’s also important to provide price transparency tools that encourage consumerism, allowing members to optimize out-of-pocket purchases.

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