Help Employers Take The Road To Consumer-Driven Health Care

Consumer-driven health care – putting more money and decision-making power in the hands of insured employees instead of plan providers – is the emerging standard for health benefits.

A successful model already in place is built around 3 powerful tools that provide terrific benefits for employees and employers alike: flexible spending accounts, high-deductible health plans, and health savings accounts which should accompany HDHPs.

However, recent data indicates that consumers are not using these tools properly. As a result, both employers and employees are missing out on the advantages. The success of the consumer-driven movement depends on the proper use of these accounts, and the potential advantages of a consumer-driven system for everyone are at stake.

Beyond just offering these benefits, it’s time for employers and their benefits advisors to take a larger role in helping employees choose them and use them.

Everybody wins–or should

Employers benefit from the successful use of the consumer-driven model. Well-designed consumer-driven plans right-size employer funded health benefits, leaving more of an employer’s overall compensation budget to reach employees in the form of cash. That means a more motivated, happier workforce; a more attractive package for new recruits; and a competitive advantage for the company.

Employees benefit as well. In addition to lower plan premiums, the consumer-driven health care model gives employees more control over their health care spending in 2 key ways.

First, consumer-driven accounts such as FSAs and HSAs shelter out-of-pocket expenses from taxes, and in the case of HSAs, the contributed money can be invested and grow until it is ready to be withdrawn and spent on qualified medical expenses or plan deductibles. The almost unheard-of tax advantages of these vehicles make it worthwhile for employees to consider these accounts as part of their overall personal financial and health plan.

Second, because the accounts confront employees with the actual cost of their decisions, through higher deductibles and more time spent reviewing out-of-pocket costs, they are motivated to spend less – by living healthier, shopping around for the care they need, or both.