Leverage Your Employer Healthcare Insurance

Healthcare plans are important to our quality of life and remain one of the most important benefits employers provide. Healthcare keeps citizens productive. Yet, the issue remains a hotbed for politicians, business owners, workers, and citizens. We see the headlines coming out of Washington from politicians and the posts from our friends on social media. How does the issue affect business owners and workers?

Business owners need healthcare as part of a great overall benefits package to keep and attract top talent. Workers express concern about healthcare benefits as a tool to provide for and take care of their families. This piece will focus on the common differences between a high-deductible plan and a preferred provider plan.

What is the difference between a high-deductible plan (HDHP) and a preferred provider plan (PPO)?

The major difference between these types of plans is out-of-pocket costs. The PPO requires a higher monthly premium and lower deductibles. The high-deductible plan mandates a higher deductible with payment of a lower premium. Also, a high-deductible plan may allow you to set aside funds in a health savings account, health reimbursement account, or flexible spending account. Each of these instruments creates tax savings for approved medical expenses (1).

The number of employers that offer HDHP has increased to 28% in 2016 from 7% in 2006 (2.) As a means of keeping costs low in a healthcare plan, businesses gather information about costs for lab work, specialists, doctors, and other medical services that employees may use. This accounts for the increasing number of high-deductible plans.

Which plan should I choose?

To answer this question, you’ll need to consider many factors. Here are a few to start:

–    Your current state of health: Consider how much you have paid in and the cost of care. Estimate how costs may change as you move from one plan to another.

–    Future healthcare needs: Like a retirement analysis, planning for future healthcare can be done with a health savings account. As we get older, we need more healthcare, so why not save money to cover future obligations? If needs are less than expected, the funds can be used later for retirement (click here for more information).

–    Cash flow: Monthly cash flow varies from household to household. Funding a PPO alternative may be desirable when compared to the larger deductibles of an HDHP with an HSA.

Once enough accumulation has taken place in an HSA, it may be a good fit for additional asset accumulation while taking care of current healthcare needs. If it is a participant’s first year in an HDHP plan, one may jump-start an HSA account with funds from an IRA (click here for more information).

Additional resources

For many companies, healthcare benefits go beyond basic healthcare. Wellness programs help employees change habits and behavior, such as losing weight or stopping smoking. Maybe your plan provides a lifestyle coach (3.) At some universities, healthcare benefits also may be provided with special onsite facilities, with the goal of reducing time spent waiting, traveling, and interacting with medical professionals

Wrap up

As you look ahead to the next benefit enrollment period, you will be able to track your expenses for the previous year and gain a better understanding of what to expect in the future. Look at your healthcare spending the same way you look at retirement spending. The way you spend and save – and the savings vehicles you use – will likely change over time. The right plan for one household may not be the correct plan for another. Use Dinky Town healthcare calculators to compare healthcare plan costs.

If you have questions about your healthcare planning, contact your human resources representative or an advisor, send me an email at ncarmany@thewatermarkgrp.com, or call me at 317-805-0840.

Sources

  1. “HDHP vs. PPO Plans.”HDHPs vs. PPOs. Web. 18 Apr. 2016. <http://www.bcbst.com/manage-my-plan/health-accounts/ppo-plan.page>.
  2. “Employer Health Benefit Survey 2016 – Kaiser Family Foundation.” Employer Health Benefits Survey 2016. N.p., 24 Sept. 2016. Web. 12 Apr. 2017. <http://files.kff.org/attachment/2016-Employer-Health-Benefits-Survey-Release-Slides>
  3. “Employer Health Benefit Survey 2016 – Kaiser Family Foundation.” Employer Health Benefits Survey 2016. N.p., 24 Sept. 2016. Web. 12 Apr. 2017. <http://files.kff.org/attachment/2016-Employer-Health-Benefits-Survey-Release-Slides>

 

Leave a Reply

Your email address will not be published. Required fields are marked *