With open enrollment underway, customized consumer directed health plans are a way to increase your business and stay ahead of the competition.
I’ve been in the health insurance business for the past 20 years and have seen its evolution from the front lines. From the advent of health maintenance organizations, preferred provider organizations and exclusive provider organizations, to today’s landscape of high deductible health plans and consumer directed health plans, the business has become complicated.
Add to this health savings accounts, health reimbursement accounts and flexible savings accounts, and banking is as much a part of being a health insurance broker as the plans themselves are. As a broker, you have to ask yourself a question: Am I in the health insurance business or do I just say I am? If you are committed to the business, understanding these new health care options is a must.
As the market has evolved and changed over the years, so have many insurance brokerages. At my agency, we chose to focus our efforts, on behalf of our clients, on consumer driven health plans combined with health savings accounts. With the continued double-digit growth in health care costs, CDHPs combined with HSAs offer our clients the most value for their health care dollar.
CDHPs and HSAs defined
CDHPs are high-deductible health plans that encourage individuals to become actively involved in making their own health care decisions. At a minimum, CDHPs engage individuals in choosing their own health care providers, managing their own health expenses, and improving their own health. A key component of many CDHPs, HSAs are tax-favored bank accounts from which funds are used to cover the cost of an individual’s health care expenditures.
The Blue Cross and Blue Shield Association reports that the adoption of CDHP/HSA plans are growing at 30% a year.
Of course, the definitions I just gave are simplistic. CDHPs and HSAs can be so much more.
Nationally, 19% of large employers are currently offering HDHP/HSA plan arrangements. That is up from 10% just two 2 years ago. Today, 45% of employers are contributing to the HSA accounts they are offering to their employees. More than 11% of the contributions are in excess of $1,000 annually.
Encouraging CDHP success
So, how do you use the CDHP and HSAs as health plan options in the field, rather than just discuss them?
CDHPs are gaining popularity as fast as the premiums for traditional plans are rising. While the demand is high, there is a significant amount of education that employers need to do before making the commitment to CDHPs. When offering CDHPs to their clients, brokers will find themselves in the roles of salesperson, educator and implementer.
From a practical standpoint these plans can be scary to individuals because of the unknown cost at the doctor’s office. In order to combat this, we empower our clients by giving them tools to enhance their user experience. We know from experience: If it is not easy they won’t do it. Employees are very resistant to change, and the plans we are implementing carry a big change factor. So let’s get started.
As stated before, the Blue Cross and Blue Shield Association claims the adoption of CDHPs and HSAs is growing at 30% a year. Most health insurance providers have eased the process of setting up CDHPs and HSAs by developing their own version of a CDHP. They have also partnered with large national banks to help ease the administration on the banking side of the plan or the HSA.
As a broker, you have to help simplify administration of the plans themselves. We see one of the biggest obstacles to a CDHP/HSA model being education. The employers do not have the time or knowledge they need to help their employees navigate a system where the employees are in charge of their own medical accounts.
At my agency, we start with the basics of employee information. We employ a single Web-based portal that houses all of an employers’ information. For the portal we use simple, easy-to-use software from a company in South Carolina.
The software is a proven commodity for us, and was chosen for its simple interface, ease of navigation and the independence of the platform.