High deductible health plans (HDHP) are skyrocketing in popularity.Surveys report that enrollment has grown from 4% in 2006 to 29% in recent years. While these plans are a great alternative to the traditional PPO or HMO, HDHPs tend to face resistance from employees because they’re believed to be more expensive, complicated, and inconvenient to use. Unfortunately, many of these assumptions are based on misinformation.
As an employer or HR leader, how do you overcome these misconceptions and show your employees the positive side of HDHPs? Here are four actionable tips you can use to help employees fall in love with their new plans.
People are already confused when it comes to basic healthcare decisions: less than half of Americans are confident they can choose the right insurance plan. It’s no wonder that employees resist adding another option to the mix. That’s where education plays a key role. It’s important to set employees up for success by clearly communicating upfront what an HDHP is, how it differs from their past insurance plans, and how it may impact it their healthcare and financial decisions.
For instance, if you educate your employees ahead of time about the high deductible that comes with an HDHP, they can save money in advance and be prepared for their first healthcare visit. Otherwise, they may be in for an unpleasant surprise when they receive a medical bill.
Here are a few additional tips to consider:
One of the greatest benefits of an HDHP is that most of the plans qualify for a Health Savings Account (HSA). For those who aren’t familiar, an HSA is a tax-advantaged account designed specifically for healthcare. The goal is for employees to use this account to put aside money while they’re healthy and later dip into those savings when they need it. The HSA can be used to pay for a variety of qualified medical expenses, from prescription medications to contact lenses to dental services.
To make it easier to understand, you can think of an HSA as a 401K – except that it’s designed for healthcare and has even more tax advantages since you can put aside part of your salary pre-tax, grow that money tax-free, and use it later for qualified medical expenses (again, without paying taxes). Also, unlike an FSA or HRA, the money in an HSA rolls over year after year so you don’t have to worry about losing it. There are so many incredible benefits associated with the HSA that, when utilized properly, can save your employees money in the long run.
Most employees transitioning to an HDHP for the first time are likely rolling off a PPO or HMO plan, which have higher premiums and lower deductibles. Individuals may experience sticker shock when they see how much their new deductible is and forget that they’re also paying a much lower premium every month.
Employers need to help their workers reframe the situation. Let’s say your employee historically paid $400 per month in premiums for a PPO, but now pays $100 per month in premiums on an HDHP. If they go six months without utilizing any healthcare services (which is entirely plausible for young and healthy employees), that’s $1,800 in savings.
Mercer has found that employees save around 30% on premiums when they’re on HDHPs. So while the deductible amount may be higher, you can remind employees about the money they’ve saved from paying lower premiums each month.
It’s important to be honest and acknowledge the fact that HDHPs aren’t the best fit for every employee. However, given the way that the plan is structured, it’s most likely to benefit younger, healthier employees. Since they’re less likely to utilize healthcare services, they’ll reap the benefits of a lower premium and put away a significant amount of savings in their HSAs.
While the most ideal way to accommodate the needs of every employee would be to offer multiple plan options, we recognize that this isn’t feasible for many companies – especially given the continuously rising costs of healthcare. However, based on the fact that millennials will make up 75 percent of the workforce by 2025, HDHPs may be your best bet when it comes to finding a plan that’s beneficial for the majority of the workforce. Showing your younger workers that the HDHP was designed with their preferences in mind and demonstrating that it can save them money is a great way to get a large chunk of your employees to embrace this plan.
Transitioning employees to an HDHP can be challenging – especially if they’ve historically been on PPO or HMO plans. It takes time, patience, and effort to get them comfortable with the HDHP, but you shouldn’t be discouraged if you find that employees don’t warm up to it right away.
All it takes is an investment in education and smart communication around the advantages of this type of plan, and you’ll eventually see employees shift their attitudes to loving their HDHPs!