HDHPs have an Ugly Branding Problem

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Benefits Consultants
Lumity, Inc.

Traditional PPO plans saddle both employers and their employees with high monthly premiums. For this reason, many employers offer High-Deductible Health Plans (HDHPs) with lower premium costs—and then offer Health Savings Accounts (HSAs) to help employees reduce their current out-of-pocket expenses and self-fund future health care expenses.

Sounds good, but...

Employees find Health Savings Accounts "confusing", and HDHPs have an ugly branding problem. “High-deductible” sounds bad. It sounds expensive. (Some People Ops Pros we talk to circumvent the branding issue by calling them “low-premium” or “consumer-driven” plans. While this can certainly be a successful tactic, just be aware that the carriers still call them High-Deductible Health Plans).

And, even though the overall annual out-of-pocket cost is often substantially lower with an HDHP, an employee may experience an initial “sticker shock." It's a big change from the familiarity of a traditional PPO—where higher premiums tend to go unnoticed as a payroll deduction, and employees are used to paying a fixed copay for services.

HDHP Assumptions

"If something bad happens, I’ll have crippling debt."

With high-deductible health plans, employees pay expenses 100% out-of-pocket (OOP) until they hit their deductible, including the cost of prescriptions. In the mind of the employee, a high-deductible plan can feel risky. If something major happens on the health front, an employee gets hit with hefty expenses—especially early in the plan year.

The Reality

There’s a limit to an employee’s financial exposure.

If something catastrophic occurs, a high-deductible health plan (HDHP) has an out-of-pocket maximum that depicts what a worst case scenario would look like. Understanding this cap can significantly reduce, or even remove, the perceived financial risk when the plan is paired with a Health Savings Account (HSA).

What You Can Do

Based on Lumity's research, these steps will drive HSA adoption:

It’s possible for both employers and their employees to spend less without sacrificing coverage.

Methodology

The steps we've outlined are based on:

  1. Lumity research: over 400 professionals in HR and finance responded to Lumity’s 2018 HSA Survey,* and 97 professionals participated in our HSA market research calls. Companies ranged in size from 15 to 15,000 employees.
  2. Our clients’ results: Lumity’s benefits experts apply the steps outlined above to drive HSA enrollment for clients such as Greenhouse, Bitly, GoFundMe, Wealthfront, and The Linux Foundation.

*Our research is ongoing, and we invite you to contribute: take Lumity’s 2-minute HSA survey.

It’s entirely possible to beat the national average—by 50%

In 2018, Lumity clients beat the national average for HSA adoption by 50%. We achieved this using the steps shared above—plus one more. During the plan selection process, the Lumity platform provides personalized decision guidance. A side-by-side comparison helps an employee easily identify the plan that will best fit their budget and healthcare needs.

As healthcare costs continue to rise, HSAs will remain a powerful tool to reduce expenses. We hope you’ll share your results with us after you apply the steps to drive HSA adoption.

Or, you're welcome to contact us for a complimentary consultation. Lumity benefits experts will assess your HSA strategy and plan design so you’ll know how you compare to other companies in your industry and region.

 

Want to Learn How A Transition From PEO Would Work For Your Company? Schedule a Free Benefits Consultation Today.