Much attention has been given to the high deductible health plan (HDHP) value proposition for employers in reducing healthcare costs. Although, by design, these plan types shift more of the cost to consumers – it doesn’t mean that these plans are not also financially beneficial for consumers.
National healthcare expenditures reached nearly $3 trillion in 2013 – up from $2.6 trillion in 2010. This staggering figure, predicted to reach $4.6 trillion by 2020, has captured the awareness of the entire nation. Consumer directed healthcare (CDH) was conceived more than a decade ago, as a mechanism for controlling healthcare costs. The premise of CDH was simple, if consumers are made more accountable for the cost of their healthcare, then they will become more responsible healthcare consumers – and overall healthcare costs will decrease.
For many decades, the majority of Americans have received their health insurance coverage through their employers. Today, US employers spend more than $1.6 trillion per year on employee benefits for more than 149 million people. ‘Defined benefit’ has been the prevailing health benefit distribution model, whereby the employer selects a limited set of health benefit plan options to offer employees, and shoulders the majority of the financial burden and risk of healthcare costs. Rapidly rising costs are driving employers to evaluate new plan designs and distribution models in order to control healthcare expenses – including defined contribution programs.
The unsustainable growth of US healthcare costs has been well documented. In an environment where insurance premiums have outpaced wage growth and inflation every year since 1998, employers must consider how they will control healthcare costs – or if they will continue offering coverage at all. These cost drivers are prompting employers to consider alternatives to traditional employee health benefit models.
The Affordable Care Act – with its individual and employer mandates, essential benefit requirements, and health insurance exchanges – is changing the face of employer-sponsored health benefits. While the ACA will increase access to insurance for millions, it will also fundamentally change the way many currently obtain coverage.
When the Patient Protection and Affordable Care Act was signed into law back in 2008, it created a mandate that requires all Americans to have healthcare. It also put in place a deadline for people to get covered, which is right around the corner on March 31. Here are some things people need to know in the weeks leading up to this deadline:
Consumer-driven healthcare is becoming more popular in the United States, which has led to increasing prevalence of health savings accounts. According to the sixth semiannual Health Savings Accounts Survey by Devenir, around 15.5 Americans are covered by HSAs, which is a 15 percent bump from the previous year. HSAs have grown to an estimated $18 billion over 9.1 million separate accounts.
When the Patient Protection and Affordable Care Act was signed into law in 2010, one of the mandates created was that all Americans would have to secure coverage by a certain deadline. That deadline is nearing, and many people could be facing a penalty if insurance policies aren't secured. Many Americans may not be in a rush to comply with the ACA mandate because they believe the penalty is pretty small. However, that may not be the case, according to NPR, as people may have misconceptions as to how much they may actually be charged for forgoing coverage.
Flexible spending and health savings accounts are a major part of the consumer-driven healthcare trend. People are able to save pre-tax dollars in these accounts to cover out-of-pocket medical expenses that they would otherwise have to pay for out of their wallets. Businesses that offer FSAs and HSAs need to make employees aware of the legislative changes that will impact these offerings this year. For example, the Internal Revenue Service recently increased the contribution limits for HSAs and high deductible health plans.
The Patient Protection and Affordable Care Act was signed into law on March 23, 2010, and since that day, the legislation has undergone numerous changes. In fact, some of the changes have even been tweaked, according to the Washington Post. With many alterations, there has been much confusion in the country among employers, whether they offer consumer-driven healthcare, traditional health insurance, or something else.