Due to the impact of health care reform, alternative funding solutions for health benefits continue to gain traction among small to mid-size employers. Amidst all this change, there are a number of emerging benefits trends and strategies that can help mitigate the financial impact of rising benefits costs.
These alternatives, including level-funding, can provide greater certainty and protection than the typical, partially self-funded solutions for larger employers. Self-insuring your benefits offers several advantages over traditional insurance. These alternatives don’t work for every employer, but are worth consideration for the potential cost-savings, transparency, and flexibility of the plans.
Consumer-Driven-Health-Plans (CDHPs) and Health Savings Accounts (HSAs) are a way for employers to offer solid benefits at an efficient price and encourage employees to shop around for lower cost healthcare services. The ACA and the recession have helped make CDHPs and HSAs popular employer health plan options. More than 30% of employers offer a high-deductible health plan, whether as part of a health savings account (HSA) or a health reimbursement arrangement (HRA) design. These plans can reduce costs by promoting consumerism in healthcare purchasing which gives employees more control of the money spent on their benefits and provides choice.
Recently two expanded health savings accounts bills, H.R. 6311 and H.R. 6199, passed in the House of Representatives. Here are some of highlights of the changes that will go into effect if these also pass in the Senate.
- H.R. 6311: Increasing Access to Lower Premium Plans and Expanding Health Savings Accounts Act of 2018.
- Sec. 2: Carryforward of health flexible spending arrangement account balances. Currently there is a $500 restriction to flexible spending account (FSA) rollover from year to year. This provision allows FSA balances to be carried over to the following plan year as long as the balance in an account does not exceed three times the annual FSA contribution limit. The FSA contribution limit for 2018 is $2,650, meaning the maximum balance in an FSA could be $7,950.
- Sec. 4: Maximum contribution limit to health savings account increased to amount of deductible and out-of-pocket limitation. This provision increases the HSA contribution limit to the out-of-pocket maximum. For 2018, the out-of-pocket maximums are $6,650 for an individual and $13,300 for a family; this effectively doubles the HSA contribution limits.
- H.R. 6199: Restoring Access to Medication and Modernizing Health Savings Accounts Act of 2018.
- Sec. 2: First dollar coverage flexibility for high-deductible health plans. Allows first dollar coverage plan designs for non-preventative coverage up to $250 self-only and $500 family under the deductible. This would include telemedicine, co-pays, office visits, and more.
- Sec. 6: FSA and HRA terminations or conversions to fund HSAs. At the employer’s discretion, this provision allows employees to convert their FSA and HRA balances into an HSA contribution upon enrolling in a high-deductible health plan with an HSA. The conversion amount is capped at $2,650 for individual and $5,300 for family coverage. Any conversion taking place during the same year as an FSA or HRA contribution will count towards an enrollees’ HSA contribution for that taxable year. This will provide consumers with an easier conversion to an HSA-qualified high-deductible health plan.
The key to a successful insurance renewal analysis and open enrollment season is based on strategy, planning and communication. But where do you begin? A trusted advisor like those at Univest Insurance can help you determine what is best. We provide guidance and advice about this topic including analyzing how alternative funding and consumer-driven health-plan strategies could impact your benefits expenses. Give me a call at 610.966.1315 to start the conversation about what approach would be best for your business and employees.
Insurance products offered through Univest Insurance, Inc. are obligations of the issuing insurance companies, not obligations or deposits of or guaranteed by any bank and are not insured by the FDIC or any other agency of the United States.