4 Things to Know About Consumer-Driven Health Plans
Consumer-driven healthcare (CDHC), in the simplest terms, refers to third-tier health insurance plans. These consumer-driven health plans allow members to use Michigan benefits such as health savings accounts (HSAs) or health reimbursement accounts (HRAs). CDHCs allow members to pay routine healthcare expenses directly and lower premiums. Some businesses prefer to offer this alternative funding instead of traditional employer-managed healthcare.
Consumer-driven health plans focus on controlling total healthcare costs. Demand will change over time, depending on employees’ needs, but the supply of quality healthcare benefits should not be limited, at least, not if you want to keep your employees happy and reel in new hires.
You protect your company.
Employers have the say in the Michigan benefits package they will offer their employees, but they also shoulder the brunt of the financial burden. CDHC plans reduce employer spending on healthcare. The reduction isn’t necessarily huge, but every little bit helps, especially for small businesses.
Because a CDHC plan is a high-deductible health plan, it protects employers from disastrous medical expenses should an employee develop a health problem that comes with astronomical costs. This type of plan also means that a company isn’t forced to pay for the just-in-case insurance costs that come along with traditional plans. Ultimately, a CDHC can reduce corporate costs.
Premiums are low, deductibles are high.
High-deductible policies sound negative, but a high-deductible policy costs less. The user pays medical claims using a savings account that is prefunded. And no one is giving up benefits for higher co-payments.
Employees who are typically healthy will spend less on premiums because they rarely need to use their healthcare. Fewer doctor visits or hospitalizations put an employee’s investment in healthcare right back in their own wallet.
Plans are customizable.
CDHC plans are customizable and cost-effective. Consumers are free to organize their own plans based on their unique needs for themselves and their family. The goal is that this level of employee (i.e., consumer) engagement will encourage every participant to be mindful about their healthcare choices.
When consumers have a bigger role in payment for healthcare, they are more likely to be conservative about their choices and, ideally, be inspired to make their health a priority and take better care of themselves to avoid unnecessary healthcare expenses.
Employees need to be educated on CDHC plans.
Employees are encouraged to shop around for the most cost-efficient healthcare. However, as well all know, healthcare is complicated when it comes to quality of care and healthcare costs. To reduce the costs of unnecessary healthcare, employees may also reduce their use of necessary healthcare for one main reason – they think they can’t afford it.
If you want employees to feel that they’re getting a benefit from a CDHC plan, they need to be educated on how to differentiate between necessary and unnecessary care. Cost transparency is essential.
Consumer-driven health plans put the power in employees’ hands. Help your employees understand the differences between necessary and unnecessary care, healthcare costs, and quality of care with help from a Michigan employee benefits expert at The Benefits Group. Contact us today.