Purdue experienced a few changes in its health care programs in 2014 by contracting with Anthem to govern the self-insured plans. With the new design, Purdue offered two high-deductible plans and one traditional preferred provider plan, PPO (1). Here we look at a few of the differences between the plans.
What is the difference between a high deductible plan (HDHP) and a preferred provider plan (PPO)?
The major difference between the types of plans is out of pocket costs. The PPO requires a higher monthly premium and lower deductibles. The high deductible plan requires a higher deductible while paying a lower premium. Additionally, the high deductible plan may allow you to set aside funds into a health savings account, health reimbursement account, or flexible spending account. Each of these instruments allow tax savings for approved medical expenses (2). For an illustration of the how the deductibles work for the plans, click here.
Both types of plans have preferred providers and higher cost out of network provisions. The out of pocket maximums are different for each plan (5).
As faculty and staff increased participation into the HSA1 and HSA2 plans to 74% (6), the potential costs covered by the university run as high as $19,454 (7). As a means to help preserve the reasonable nature of the plan, Purdue gathers information on costs for lab work, specialists, doctors, and other medical services. The employees may then compare services by the Castlight program, saving the university and participant money (8). The program is convenient and easy to use (click here for more information.)
What is the different between the two high deductible plans?
Aside from the premiums and deductible amounts, coinsurance levels are different as well. For example, a test for a preferred provider is 20% coinsurance for the HSA1 and 25% coinsurance for the HSA2. Many of the excluded services are the same (3,4). The out of pocket maximum for the HSA2 is higher than the HSA1 (5).
Which plan should I choose?
Numerous factors need consideration to answer this question. Here are a few to start:
– 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 other. Purdue ran examples for illustration purposes.
– Future healthcare needs: Like a retirement analysis, planning for future healthcare can be done with the health savings account. As we get older, more healthcare is needed, so why not save money to cover future obligations? In the event actual needs are less than expected, the funds may be used for retirement (click here for more information).
– Cash flow: Monthly cash flow varies from household to household. Funding the PPO option may be a desirable option when compared to the larger deductibles of the HSA1 and HSA2.
Once enough accumulation takes 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 for an HDHP plan, one may jump-start an HSA account with funds from an IRA (click here for more information).
Purdue University also set up the Center for Healthy Living that “provides the preventive care services that are vital to protecting your health, and treats your illnesses and your ongoing conditions (9.)” Medical services supplied by the center include treatment for common illnesses, primary care and wellness, conditional management, and tier 1 labs.
Faculty, staff, retirees, and family members covered by the Purdue Health Plan, HSA1, or HSA2, or J-1 Visa Plan Participants may receive services at the center. Employees who are benefit-eligible but not covered by a Purdue medical plan may receive preventive care, primary care, and treatment of common illnesses for $40 per service.
As you look ahead to the next benefit enrollment period, you will be able to track your expenses for 2016 and gain a better idea of what to expect beyond 2017. Look at your healthcare spending in the same way you look at retirement spending. The way you spend and save, and the savings vehicles used, will likely change over time. The right plan for one household may not be the correct selection for another.
If you have questions regarding your healthcare planning, contact your human resources representative or an advisor, or send me an email at email@example.com.
- Lewin, :uis. “2015 Purdue Medical Benefit Programs.” Letter to Members of the Board of Trustees. 17 Sept. 2014. MS. West Lafayette, IN.http://www.purdue.edu/bot/meeting-documents/2014/sept/aic/health care plan.pdf
- “HDHP vs. PPO Plans.”HDHPs vs. PPOs. Web. 18 Apr. 2016. <http://www.bcbst.com/manage-my-plan/health-accounts/ppo-plan.page>.
- Purdue University: Health Plan Plus H.S.A. 1. Plan Description Coverage Period: 01/01/2016 – 12/31/2016. West Lafayette. <http://www.purdue.edu/hr/Benefits/currentEmployees/Medical/pdf/2016/Purdue_Health_Plan_Plus_HSA_1_SBC.pdf>
- Purdue University: Health Plan Plus H.S.A. 2. Plan Description Coverage Period: 01/01/2016 – 12/31/2016. West Lafayette. 5. <http://www.purdue.edu/hr/Benefits/currentEmployees/Medical/pdf/2016/Purdue_Health_Plan_Plus_HSA_2_SBC.pdf>
- “2015 and 2016 Medical Plan Coverage Comparison.” Medical Plan Coverage Comparison. Web. 19 Apr. 2016. <http://www.purdue.edu/hr/Benefits/currentEmployees/Medical/employeeCosts.html>.
- “Through the Years: A Look at Our Medical Premiums.” Human Resources: CONNECT (2015). Print. <http://www.purdue.edu/hr/newsletter/Connect/connect_10_15/medical_premiums.html>
- “2015 and 2016 Annual Employee/Employer Medical Plan Contributions.” Annual Employee/Employer Medical Plan Contributions. 2015. Web. 19 Apr. 2016. <http://www.purdue.edu/hr/Benefits/currentEmployees/Medical/ContributionChart.html>.
- “Castlight – Benefits – Purdue University.” Castlight – Benefits – Purdue University. Purdue University, 2015. Web. 19 Apr. 2016. <http://www.purdue.edu/hr/Benefits/castlight/castlight.html>.
- “Welcome to the Center for Healthy Living.” Center for Healthy Living. Purdue University, 2015. Web. 19 Apr. 2016. <http://www.purdue.edu/hr/CHL/>.
- “Cost and Eligible Clients.” – Center for Healthy Living. Purdue University, 2015. Web. 19 Apr. 2016. <http://www.purdue.edu/hr/CHL/Services/costs.html>.