Based on research by Thomas W. Kess, a Philadelphia-based senior consultant with Milliman Consultants and Actuaries
Employers considering offering a HSA or HRA should determine if either would work for their companies. Determining if a Consumer Driven Health Plan (CDHP) is appropriate requires assessing the readiness of employees, the readiness of the organization’s infrastructure, and the financial feasibility of offering a CDHP.
Assessing employee readiness means gauging employee:
Understanding of health care costs and employer-employee sharing
Understanding how lifestyle relates to health issues and ways they can reduce health care costs
Readiness to learn about health care and to change their health care purchasing behavior and their own lifestyle.
Assessing the company’s readiness means looking for what is and is not in place, including:
Its short and long term health care benefit strategy.
Its contribution philosophy and current participation.
Its risk tolerance.
Its expectations regarding personal responsibility.
Its expectations of company support and resources.
The value the company places on employees’ health.
The company’s perceptions of CDHPs.
The company’s systems, administration, and communication resources.
The company’s key constituents – executives and management, departments and major functions, IT and HR systems, payroll, HR administration, and the health carrier – are ready to roll out a CDHP.
Assessing the financial feasibility of rolling out a CDHPmeans looking at:
The impact on the employer’s finances by conducting cost projections and risk assessments, and considering the expense of administering the plan and employer responsibilities and resources.
The impact on the employees. This includes looking at what cost sharing would mean; the impact on the lowest-paid workers and those with the highest health care needs; and the opportunities for employees to accumulate HSA and HRA balances.
Companies offering CDHPs need to:
Emphasize wellness that includes providing 100 per cent preventative care such as annual physicals and screenings, and creating a culture that promotes and supports health and wellness such as offering smoking cessation and weight management classes, providing healthy foods in vending machines, and providing fitness opportunities.
Follow all of the steps for preparing the organization and employees for the new CDHP. Rushing the process for installing the plan can create employee misunderstanding, confusion and frustration, contribute to risk resistance from senior management, and run the risk of having problems administering the plan.
Select a CDHP design that has been tested or customized to your company or the result may be a weakened plan, low enrollment and low improvement in health care costs.