Changes in Consumer Driven Health Plans

Increasingly cost-effective consumer driven health plans are on the rise in 2016. Why? As with most goods and services, growing enrollment promotes economies of scale, and diminishes the efficacy of competing programs (such as high-contribution HSAs and subsidized standard PPOs). The decrease in HSA contributions has enabled employers to fund a number of targeted health products, including accident, critical illness, and hospital indemnity.

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While similar to elective coverages, there are some differences. A key component of streamlining administrative burden lies in moving the products from an individual platform to a group chassis. Further, the new indemnities offer reduced coverage to accompany the higher deductibles, continuing to promote reduced burden-sharing for the majority of Americans who need minimal healthcare services.

The lower policy values result in reduced costs for employers and employees alike, and emphasizes responsible use of resources by reducing or eliminating coverage for services like emergency room visits. In addition, the simplified plan designs and lower face amounts have eliminated the need for underwriting, so enrollment is much simpler and requires less administrative work on the part of the employer.

Greater price stability makes CDHPs more sustainable long-term than HSA contributions. As long as these plans continue to comply with ACA regulations, employer-funded indemnity products will likely continue to grow in popularity and efficiency. In light of this rapidly shifting benefits landscape, it’s crucial for HR directors and benefits advisors to work in concert to maintain compliance and optimize offerings for employees. To learn more, contact Chelten Consulting.