WHAT GOOD WILL COME FROM ACA? Employers Will Finally Realize the Value of Consumer Directed Health Plans and HSAs
By Lisa M. Holland, RN, MBA and Gregory J. Hummer, MD
Since the final determination of the Affordable Care Act and after all is said and done, there is very limited value to employers and individuals. Perhaps the exception would be that employers are now looking seriously at Consumer Directed Health Plans linked to a Health Savings Account as a primary benefit design alternative to avoid the excess taxes and penalties associated with rich plan designs.
The good news, employers will be delighted to find all of the data that supports healthcare savings, behavior change and increased participation in wellness programs is accurate; and that these plans actually work to achieve healthcare affordability. A Consumer Directed Health Plan (CDHP) is really the only logical plan to offer as it actually helps employees become accountable and responsible for their healthcare while offering tremendous savings to the employer. It is important, however, that these plan designs be implemented correctly in order to achieve the highest level of success and employee satisfaction.
Why the move to CDHP? As ACA continues to unfold, it is clear that employers will be penalized for “rich” plan designs. In 2018, ACA will impose the Cadillac tax, under Section 9001 of the ACA, health insurers and sponsors of self-funded group health plans will be assessed an excise tax on any benefits provided to employees that exceed a pre-determined threshold. In an effort to avoid this tax, employers are working with their brokers and realizing that the best option is to implement a CDHP. This is good news and an unintended consequence of ACA. A CDHP with a Health Savings Account will save employers a fortune in claims and administrative costs and will impact employees’ health behavior patterns as they become good consumers of healthcare. Employees will learn to transform their “bad” health behaviors through Personal Economics. Employers will see their corporate wellness programs pay off as their employees stay fit and become financially well.
The facts about CDHP are now plentiful and demonstrate dramatic savings on claims costs, employer FICA tax savings, employee tax savings, and a realization on the part of covered participants that it pays to stay healthy!
Sharing risk was the only logical method in the early days of health “insurance” before it became a cost plus industry; a “right” and now a gift that is abused. Employees have lost sight of the enormous amounts of cash that has been stripped away from their potential raises and retirement contributions, all which has jeopardized their financial wellness as well as their company’s bottom line.
So it appears based on some early forecasts by some of the larger broker firms that the adoption of CDHP is on the rise. Perhaps ACA will force employers to finally take the most logical and appropriate action to achieve healthcare affordability and insure the health and well-being of their employees. A full replacement high deductible health plan with a health savings account will benefit all stake holders except the medical profession.
Think about a tax free shift of capital out of the $1.2 trillion dollar commercial medical sector to employees HSA accounts. Employees will start to change those bad habits that are now responsible for 70% of preventable chronic disease. Financial wellness can be achieved.
Over the past decade employers have been slow to adopt a full replacement CDHP because they have been bogged down with complicated communications and “rocky” implementations. It’s true that the traditional carriers offer a clunky implementation, but better ways do exist. The current means of implementation misses the mark. There are some very important steps to properly shift your workforce to this type of full replacement plan. In fact, it can be so successful that your employees might get angry at management over the amount of money they could have saved tax free since CDHP inception in 2004.
We know from implementing CDHP plans that there is a magic number measured in cash in one’s HSA account, which causes even the most rudimentary employees to get wise to the fact that if they stay healthy, they get wealthy. Remember, that all screening tests and most primary care for children is covered first dollar under the new ACA rules. However, most plans have covered these essentials for years without ACA persuasion. Hence, there is absolutely no disincentive in these plans to get your routine screening care and child care.
We have all heard the term “Consumerism” which has been widely bantered about, such that it has numbed our senses to what consumerism may really entail. If a high deductible plan is implemented with the best consumerism tools; consumerism works and the value to all is exceptional. The HSA is the biggest gift horse since the 401K. Once your employees have adapted to the new way of thinking about their healthcare, enhanced with the help of personal economics and rising amounts of cash in their HSA accounts, they’ll be smiling all the way to the bank.
In order for these types of plans to truly be successful you need to eliminate all the hassle and pitfalls now associated with CDHP/HSA and that means getting rid of employee anxiety, the debit card, fraud, claim forms, member confusion caused by being flooded with provider bills and employee cash flow problems. It also means getting a better discount for members and employers now paying cash and having a highly focused wellness program.
All of this can be accomplished by a different kind of claims payment system; one whose time has finally come. The Point of Service adjudication and payment system is the answer. It simply allows the best implementation of a CDHP/HSA, accomplishes all of the above, does away with member anxiety over moving to a high deductible plan and fosters savings in such a way that the cash piles up, which then becomes the positive reinforcement mechanism for health behavior change. It’s all about consumerism, tax free cash and a new way of paying for provider care. Put them all together and it truly is the “Holy Grail” for healthcare.
So, thank you ACA, for helping to open the eyes of employers to consumerism and directing them to seek and implement a benefit plan design that will bring about a healthy, wealthy and productive workforce.
About Simplicity Health Plans
Cleveland, Ohio - Simplicity Health Plans is the best implementation of a CDHP/HSA. It aligns the interests of the Employer, Employee and the Provider to provide a turnkey, fully integrated Consumer Directed Health Plan. It also delivers a low cost, scalable solution to control claim costs. The Plan fuses unparalleled technology, point of service adjudication, real-time data, and first of its kind anti-fraud controls. Services include an ERISA compliant health plan, HSA administration and banking, medical claims administration, TPA functions, pharmacy, dental & vision, COBRA, stop loss reinsurance, real-time
Utilization Review and Case Management, Health Coaching, Comparison Shopper, Health & Wellness programs, and a host of on-line tools for Providers, Employers and Members.
About the Authors
Lisa M. Holland, RN, MBA has been in the healthcare care industry for over 18 years and held senior level positions within major healthcare organizations. Lisa is an accomplished wellness subject matter expert and President of the StayFit Plan administered by Simplicity Health Plans. Contact Lisa at (216) 367-3092 or stayfitinfo@simplicityhealthplans.com
Gregory J. Hummer, M.D., has spent the last 18 years developing and perfecting Simplicity Health Plans to solve the vexing complexities, out-of-control costs, burdens and inefficiencies associated with today’s healthcare system. Dr. Hummer is Chairman and CEO of Simplicity Health Plans. Contact sales@simplicityhealthplans.com or log onto www.simplicitiyhealthplan.com for more information.