Daniel Stewart

Why Creating a High-Deductible Health Plan Strategy is Important

High-deductible health plans (HDHPs) are a common employee benefit that many companies offer. These health plans can be advantageous for both employees and employers because it's a low-cost option for both parties.

By design, an HDHP comes with higher out-of-pocket costs in exchange for lower premiums. But, without a proper HDHP strategy, there can be serious drawbacks to these health plans.

A Mix of Pros and Cons

HDHPs are beneficial because they cost less for both employees and employers. They also cover one of the most important factors to becoming eligible for a health savings account (HSA).

However, studies show that the higher deductibles still make it difficult for some people to afford preventative care and treatments. As a result, enrollees may delay or avoid getting the care they need. That may lower healthcare utilization, negatively impacting an employee's well-being.

Experts say that having a solid strategy can improve the value of these plans, allowing companies to retain the benefits while prioritizing the needs of their employees.

Elements of a Good HDHP Strategy

There are many ways to maximize the value of an HDHP.

The first is to offer HSA contributions. One of the biggest benefits of having an HDHP is the ability to open an HSA, creating long-term savings that employees can use to cover medical expenses. To maximize the advantages of an HDHP, employers can offer HSA contributions. That money comes with several tax benefits, making an HDHP more valuable while encouraging employees to use it.

Many employers offer a year's worth of front-end contributions at the start of enrollment to make the funds accessible as soon as possible. Some also provide additional contributions based on employee actions, such as completing annual physicals or wellness initiatives. This approach encourages healthy behavior and healthcare utilization.

Employers should also prioritize education. An HDHP and an HSA provide retirement and tax-based advantages. These benefits can be long-term when employees utilize an HDHP strategically. Educating them on what's possible with an HDHP and HSA helps employees maximize the value of their policy.

Author Resource:-

Daniel Stewart has been helping people with their money management and personal finance with over 15 years' experience in business finance. You can find his thoughts at HSA strategy blog.