13 July 2017

What Do Employees Need to Know about an HDHP?

As more employers transition to high deductible health plans (HDHPs), it’s important to educate employees about how this plan works.

You pay expenses until you meet your deductible

Most HDHPs only cover preventive care services until the deductible is met. So, employees need to know:

  • You pay the full cost of medical services, including lab work and tests, until you meet the deductible.
  • You also pay the full cost of prescriptions until you meet the deductible (paying the full cost of prescriptions is likely to cause the most heartburn for employees who are used to copays).
You can pay out-of-pocket expenses with pretax dollars

With an HDHP, employees have the option of opening a health savings account (HSA). It’s important to tell employees:

  • An HSA is an account that you can allocate pretax dollars to each pay period (up to IRS annual limits).
  • You can use money from your account to pay out-of-pocket expenses.
  • There is no use-It-or-lose-it rule — the money in your account rolls over year to year.
You can actually save money

Employees who don’t typically go to the doctor very often really can save money with an HDHP. Here’s what they should know:

  • Since HDHPs require you to pay out of pocket for most appointments until your deductible is met, you typically pay less per pay period in premiums than you would with a traditional plan.
  • While your out-of-pocket cost per visit may be much more than a visit covered by a traditional plan, what you save in the cost of the premium can make up for it.
  • If you have more complex needs or a chronic condition, an HDHP might not be for you.
You don’t actually want to meet your deductible

With most plans, hitting your deductible means more services are covered and you save money. But with an HDHP, the deductibles are significantly higher, so hitting the deductible probably won’t save any money. Let employees know:

  • Carefully crunch the numbers before choosing your medical plan to determine which plan is best for you.
  • If you think you might hit the deductible in an HDHP, a traditional plan with higher premiums and more coverage might be better for you.
You’ll be a better health care consumer

One of the unexpected benefits of an HDHP is that employees see first-hand how expensive doctor visits, blood work, imaging tests and prescriptions are. Understanding the cost of health care services makes employees more knowledgeable and savvier consumers — and this has a ripple effect that benefits the entire health care system. Therefore, employees need to know:

  • Cost of services can vary from place to place, so shop around. An MRI at one facility may cost $1,500, and at a facility right around the corner, only $500, with the same quality of service.
  • Making healthier lifestyle choices can improve your health and reduce or eliminate the need for some prescriptions. This can greatly reduce your out-of-pocket costs.