Written by Derek Winn
Over the past decade, health plans have undergone a myriad of changes to help keep benefit costs manageable. One of the most common strategies to cut costs is to increase out of pocket exposures, and take some risk off of the insurer. Sometimes this can even be done with great success to reduce costs, while leaving Employees at a near fully insured level.
Carriers have developed innovative methods to back-fill against this exposure, including Health Reimbursement Account plans, and taking advantage of IRS approved Health Savings Account plans. These two methods provide a “vehicle” to limit exposures, leaving flexibility for Employers to decide their role and cost-share in covering initial expenses. There is shared responsibility with Employees to ensure that they are made “whole” through their own contributions and cost shares as well.
Here are some other helpful items to consider:
1. Flexible Spending Accounts
While FSA’s have undergone changes with Health Care Reform Legislation (limited to $2,500 annual maximum contributions effective 1/1/13), their advantages remain the same:
- Pre-tax advantaged contributions
- Money that is “fronted” so that it is available at a time of need.
The fact that money is fronted for the Employee and their family to take advantage of makes them very attractive in the event that someone living paycheck to paycheck needs to come out of pocket for a scheduled procedure, birth of a child, and more. Decreased financial liquidity concerns are one of their greatest advantages.
2. “Insurance Plans for Insurance Plans”
Many vendors have created plans to fill various “gaps” in today’s health plans. This could include a laundry list of items, such as overnight hospital stays, ER visits, follow up co-pays, and more. These benefits are payroll deducted, allowing for Employees and their families to help better protect themselves in the event of a covered benefit. Employees appreciate options, so offering them the opportunity to learn more about these plans is a great way to show them you care.
3. Disability Plans
It’s important to note that when a sudden medical condition arises, a loss of income could potentially be associated with it. An Employee struck with a unexpected and devastating medical condition will need to consider the following:
- What is my out of pocket exposure?
- How much time will I miss from work?
- How can I cover lost income?
- What if it’s a permanent disability, I lose my job, and I now need to cover COBRA/Medical premiums?
Disability plans are an essential part of financial planning – something that many Employees depend on their Employers for in today’s market. These are very cost effective, and can go a long way to help better protect Employees and their families.
BBG is here to help you and your Employees take the guess work on how to better prepare for these types of scenarios. Money doesn’t fall from the sky every day, but we can help make sure that there are options there when they are needed the most.