Employer Options for High Deductible Health Plans

More companies and organizations are choosing high-deductible health plans (HDHP) than ever before. Kaiser Family Foundation found that the number of employees that enrolled in high-deductible plans rose from 4% in 2006 to 24% in 2015 And 41% of the employees chose a high-deductible plan in 2016.

These facts mean people are paying more of their initial health care costs themselves, even if they have insurance.

Though they are completely different products, both an HSA and a fixed indemnity insurance plan can help you manage the added costs that come with a high-deductible medical insurance plan.

Options for the High Deductible Health Plan

OPTION 1: HSA

If employees like setting aside money for a rainy day, an HSA allows them to put pre-tax money in their account to use for medical expenses not covered by their insurance plan. They get to build their own health care costs nest egg, and when the employer makes a contribution there are tax advantages for both employer and employee. Learn more.

hdhp explained

OPTION 2: FIXED INDEMNITY PLAN

Employees looking for financial help in meeting their health plan’s high deductible right away or for some of the unexpected health care costs that can blow their budgets, a fixed indemnity insurance pays a set benefit amount for covered common medical expenses. Employees submit the expense, and the plan pays lump sum cash benefit regardless of any other health insurance they may have.

fixed indemnity explained

PRO TIP  is one of the most competitive companies from our market research that offers comprehensive hospital indemnity plan to cover cost below the deductible. *Rate Sheet, Hospital Choice Brochure.

Best Practices

The best way your employees should use their HSA is to treat it as an investment tool that will improve their financial future in retirement. And the best way to do that is to never spend their HSA contributions during working years.

In other words, employees should think of HSA contributions the same way they think of contributions to any other retirement account: untouchable until you retire. Remember, the IRS does not require them to take distributions from their HSA in any year, before or during retirement.

Adoption and Utilization

A study conducted by the Assistant Secretary for Planning and Evaluation (ASPE), a data collection division of Health and Human Service found the best way for employers to on-board their employees with new benefit changes and concepts is through education. Employees prefer orientation that is readily accessible. Mid Michigan Health Insurance Advisors have developed on-line learning management systems that allow employees to learn these concepts and more from smartphones, mobile devices and laptops. Learn more.

Status

Optional, but highly
recommended*

Source

MMHIA

Effective timeline

Permanent

*Trends predict that HSA will replace 401(k) by 2035 in less than 20 years the market will make a dramatic shift, as employers look to achieve more with less administration and less cost to operate.

This means the COVID-19 pandemic may accelerate the adoption rate and could potentially faze out 401(k) before 2035

* The rates for Aflac illustration for the State of Texas based on weekly payroll cycle; rates may vary by state and plan customization. Talk with your Aflac broker to understand how this could be an additional benefit to your company High Deductible Health Plan option.

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