When it comes to health insurance, employers are looking for ways to maximize their premium dollars. Employees want to pay lower premiums and less out-of-pocket. Health Incentive Accounts (HIAs) may be the solution.
On average, workers in 2010 paid 14-15% more for health insurance than they paid for their 2009 employer-sponsored health insurance premiums. The total annual family premium was around $14K and single coverage was around $5K, according to the 2010 Employer Health Benefits Survey, from the Kaiser Family Foundation and the Health Research & Educational Trust.
An HIA is a reimbursement account tied to a health plan and is used to pay qualified medical out-of-pocket expenses for employees and their covered family members who are enrolled in these plans. Employees earn dollars by engaging in a variety of health improvement activities throughout the year. The employer funds the account and it is usually administered by the health plan or a third-party vendor. Unlike other similar types of accounts, any unused funds are typically rolled over at the end of the year — there is no “use it or lose it” provision.
Over the past several years employers have begun to transition away from traditional health plans. More employers are offering savings/reimbursement accounts as alternatives. Many times, these are tied to Consumer Directed Health Plans or CDHPs which are high deductible health plans with lower premiums. With a CDHP the employer has more “skin in the game” and employees are ultimately rewarded for more engagement.
Requiring the completion of a personal health assessment (PHA) in exchange for a monetary reward is a good first step. The PHA is an evaluation tool that determines the health risk factors of each employee. This enables the employer and the health plan to offer targeted solutions for managing health conditions through wellness and disease management programs. Employees can then earn funds by taking specific steps to improve their health, such as engaging with a health coach or participating in a tobacco cessation program.
Here are three ways that HIAs can help save money for the employer and employee:
- Reducing the overall insurance premium. An HIA paired with a consumer directed health plan (CDHP) allows an employer to offer a less expensive health plan and make up the difference in benefit coverage by giving employees a way to earn extra dollars to cover their out-of-pocket costs.
- Employees make better healthcare purchasing decisions. By increasing employee engagement and “skin in the game,” employees pay more attention to the cost of services, and where possible, will make a more economical choice.
- Employees are participating in activities to manage and improve their health. The result of employees improving their health, over time, is reduced healthcare usage and expense.