Consumer Driven Healthcare Archives

Phrases Made Easy: “High Deductible Health Plan” (HDHP)

Welcome back to another edition of “Phrases Made Easy.” Our intention with this series is to help make all of those long, drawn-out insurance phrases easier for people to understand. One of our biggest goals is to give our clients and potential clients the power to put the things in place that make the most sense. Well-informed consumers can make a big difference.

This post is about High Deductible Health Plans (or HDHPs). We selected this phrase for a few different reasons:

In many cases (but not all), High Deductible Health Plans (HDHPs) are the cornerstone of Consumer Directed Healthcare.
High Deductible Health Plans are usually used in coordination with HSAs and HRAs.
Consumer Directed Healthcare & High Deductible Health Plans are currently very popular within our industry.

To put the concept in perspective starting off, a High Deductible Health Plan (HDHP) usually works with other products in a system. Much like systems in a house: you have to have plumbing first to run your sink; you have to have electricity first before you can turn on your TV; and you need to have the walls and windows completed, before you turn on the heater or air conditioner.

EPLemon The visualization mentioned above is similar to the components that work with a High Deductible Health Plan (HDHP). There are four things that usually work in the system:

A High Deductible Health Plan (HDHP)
A Health Savings Account (HSA) or Health Reimbursement Arrangement (HRA)
Supplemental Health Insurance
Tax Incentives (Section 105/106 & 125)

The management and coordination of the above concepts all make up a system that can help people manage their own health services more affordably and efficiently. In most cases, the system we just described is commonly referred to as Consumer Directed Healthcare.

Here are some additional facts about High Deductible Health Plans (HDHPs):

Insurance premiums can be most easily controlled by raising or lowering the deductible.
A High Deductible Health Plan can be referred to as a “catastrophic plan” that covers the lion’s share of the bills in the event of a hospitalization. HDHPs also usually have at least one yearly wellness visit.
Cash payments for other services (ie: deductibles, co-insurance, co-pays, physician visits, cash payments for lab work, cash payments for primary care, etc) can be funded w/ tax-advantaged (or sometimes tax-free) arrangements such as HSAs and HRAs. In most cases, unused cash is retained by individuals or employers.
Cash payments through an HSA or HRA encourage providers (doctors, hospitals, and dentists) to be more transparent with their pricing.
Additional concerns (accident, cancer, etc) can be “shored up” with supplemental health insurance plans.
High Deductible Health Plans work very well with the evolving Defined Contribution Healthcare model.

A High Deductible Health Plan was defined in 2013 (for HSA qualification) as a plan with a minimum individual deductible of $1,250/year, and minimum family deductible of $2,500/year. Should you have further questions about how a High Deducible Health Plan might work for you, we encourage you to contact us any time.

Thanks for stopping by, we hope you found our information to be valuable. Check back at our blog to get further information about funding healthcare. Also, please share with your friends, clients, colleagues, and family. Here are a few of our other information outlets:

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Benefits Chalk Talk: What are the differences between a Health Savings Account (HSA) and a Health Reimbursement Arrangement (HRA)?

February 11, 2013/in Benefits Chalk Talk, Employer Info, Health Reimbursement Arrangements (HRAs) /by PolicyAdvantage

Welcome back to another post in our series called “Benefits Chalk Talk.” This series is designed to help people and employers better understand all of the tools that are available when funding their healthcare. Our biggest goal is to help our clients and potential clients put the things in place that make the most sense.

This post will help you make comparisons between two very important concepts: Health Savings Accounts (HSAs), and Health Reimbursement Arrangements (HRAs). The reason these two are so important is because they are “money smart” concepts that can help you retain funds. When utilized correctly and with the proper guidance, they can help you save premium dollars that would normally go to the insurance companies.

Here are some important comparisons between an HSA and HRA. We’ll show them as questions, so they’re easier to understand:

Can I get a general overview of both an HSA and HRA? What exactly are they?

Health Savings Account: HSAs are accounts that are created at financial institutions (usually banks). It is established in an employee’s or individual’s name. An HSA helps someone save and pay for medical expenses tax-free. The account is owned by the individual. Participation in an HSA requires enrollment in a high deductible health plan (HDHP).
Health Reimbursement Arrangement: HRAs are the funding option that gives the employer the most control. The employer determines what services are covered, the amount they want to give each employee, and retains control over unused funds.

Who can make contributions to an HSA and HRA?

Health Savings Account: An employer can contribute to an HSA. The employee/individual can also directly contribute to an HSA. Further, an employee can re-direct salary to an HSA account.
Health Reimbursement Arrangement: The employer is the only one that can contribute to an HRA. An employee may not contribute to an HRA in any way.

Who owns an HSA and HRA account?

Health Savings Account: The individual/employee owns the account.
Health Reimbursement Arrangement: The employer owns the arrangement/account.

Who has responsibilities during claims when they pertain to HSAs and HRAs?

Health Savings Account: Only the employee is responsible for maintaining supporting claims records. The employer does not need to be involved.
Health Reimbursement Arrangement: This is an ERISA plan. The employer (or HRA administrator) must substantiate claim expenses.

How involved do I have to be as an employer?

Health Savings Account: There is no employer involvement required in administration or compliance. Although, the employer may contribute and allow for payroll deferral (either after-tax, or through Section 125).
Health Reimbursement Arrangement: This is an ERISA plan, where compliance is required (proper reporting documents and administration).

Do my funds rollover year-after-year?

Health Savings Account: Yes. Funds in a Health Savings Account will rollover year-after-year. There is a maximum yearly contribution that is adjusted at times. The account goes with the individual/employee if they leave or change jobs.
Health Reimbursement Arrangement: Employers generally allow some rollover for future years’ use. However, money does not go with the employee, if the employee changes jobs.

The above questions should give you a basic understanding about the differences between an HSA and HRA. There are additional details about planning strategies when using HSAs and HRAs. Each business and individual is unique, so please contact us anytime to get further information about what types of insurance plans may fit your situation best when working with a Health Savings Account or Health Reimbursement Arrangement. These are both very valuable tools.

Thanks for stopping by. Check back at our blog to get further information about funding healthcare. Also, please share with your friends, clients, colleagues, and family. Here are a few of our other information outlets:

Home Page: https://policyadvantage.com

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Phrases Made Easy: “Consumer Directed Healthcare”

January 28, 2013/in Employer Info, Phrases Made Easy /by PolicyAdvantage

This is another post in our series called “Phrases Made Easy.” The purpose of this series is to help our clients and potential clients understand insurance jargon that has a tendency to be complicated.

Consumer directed healthcare is an important concept that sounds difficult… but it really is very simple! We’ve selected this phrase for a few reasons:

It’s a concept that gives the consumer power to make their own health benefits decisions.
It is an important concept in the post-healthcare reform environment.
It is a phrase you will see a lot in our content at Policy Advantage Insurance Services (in fact, it was already in another one of our series’ called Benefits Chalk Talk: Consumer Directed Healthcare).

Easy

Here it is… this is the Policy Advantage Insurance Services definition of consumer directed healthcare:

Consumer directed healthcare is the idea that patients will behave as medical consumers. Patients will be the ones deciding how their healthcare dollars will be spent. Not doctors, employers, insurance companies, or the government.

That’s it… that’s all it is. You (the consumer) make your own decisions about your own health benefits.

As a consumer, you’ll need to know about all of the different “tools” that are available to you. You’ll also need to know whether-or-not you’re getting help from an employer, the government… or if you’re doing it on your own (there are also combinations of the three).

That’s where Policy Advantage Insurance Services comes in. We share valuable, up-to-date, relevant information that helps businesses and individuals finance (pay for) healthcare. In other words, we help you put all the pieces together. These are the kinds of questions we can help you with:

What kind of health insurance plan should I be looking at?
What do I need to know about healthcare reform, and what kinds of new options are available?
How can my employer or the government help me?
Are there any tax incentives when it comes to health insurance/benefits?
Where does dental insurance and supplemental health insurance fit in?
What is a health savings account, and a health reimbursement arrangement?
…plus others.

There you have it… consumer directed healthcare, made easy. Thanks for stopping by, we hope you found our information to be valuable. Check back at our blog to get further information about funding healthcare. Also, please share with your friends, clients, colleagues, and family. Here are a few of our other information outlets:

Home Page: www.PolicyAdvantage.com

Twitter: www.twitter.com/PolicyAdvantage

Facebook: www.facebook.com/PolicyAdvantage

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Benefits Chalk Talk: Consumer Directed Healthcare

December 10, 2012/in Benefits Chalk Talk /by PolicyAdvantage

This is our first post in our series called “Benefits Chalk Talk.” Much like an after-practice or halftime chalk session in athletics, our goal is to help empower our clients to put all the many different benefits tools in play. And, much like you face different opponents in a sports contest (and strategies change over time)… our chalk sessions will provide relevant, up-to-date information that will help give you the advantage.

Today’s topic is “Consumer Directed Healthcare.” We selected this as our first concept for a number of different reasons:

Consumer Directed Healthcare’s foundation rests upon individual choices, planning strategies, and knowledge.
Consumer Directed Healthcare will be a concept of emphasis in the post-healthcare reform (Obamacare) environment.
Consumer Directed Healthcare emphasizes the direct involvement of the consumer, encouraging people (and employers) to make sound, informed purchasing decisions (the idea is to make the whole system more efficient).

So this leads us to our question: What exactly is consumer directed healthcare?

Well… consumer directed healthcare has many different definitions. Sometimes it’s even referred to as consumer driven healthcare.

This is the definition we use at Policy Advantage Insurance Services:

Consumer directed healthcare is the idea that patients will behave as medical consumers. Patients will be the ones deciding how their healthcare dollars will be spent. Not doctors, employers, insurance companies, or the government.

Some definitions claim that consumer directed healthcare must be utilized with a high deductible health insurance plan (HDHP). We reject this definition, because we think that all tools and programs must be considered when someone is directing their own program (whether-or-not their strategy includes the use of a high deductible health insurance plan).

There are many things that go into consumer directing:

Am I an individual or employer?
What is my personal situation (family, hobbies, lifestyle, etc)?
Should I utilize private or public options (or a combination of the two)?
What type of heath insurance plan should I put in place?
What are HSAs and HRAs?
What do I need to know about dental, vision, and ancillary programs?
What kinds of tax incentives are available to me?
Plus others…

We’ll answer these kinds of questions in future blog posts. “Benefits Chalk Talk” will identify the different areas of healthcare benefits planning, and then inform the consumer on how to put them into play.

Thanks for stopping by, we hope you found our information valuable. Please feel free to follow us at our other outlets:

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