The Corporate Executive Board, an advisory and research company, and HighRoads, a compliance and health care costs services provider, assembled 2011 data from almost 11,000 medical plan designs and the medical plan rates of more than 30 million Americans. The data showed that an average of $187 dollars per year in out-of-pocket expenses was saved when an employee used a high-deductible Consumer-Driven Health Plan, or CDHP. The savings for families averaged $204.
However, when compared with Health Maintenance Organization (HMO) plans and traditional Preferred Provider Organization (PPO) plans, CDHP premium and out-of-pocket savings might be too little, as well as the deductible being too high, to spur employees to make the change. Even with substantial communications related to high-deductible CDHPs, PPOs are still the most widely offered and popular plans, representing 39% of employer plans. HMOs represented 27% of U.S. employer plans and CDHPs linked to Health Savings Accounts (HSAs) represented 17%. Other data included:
- Traditional, non-high-deductible plan premiums averaged $132.11, exclusive provider organization (EPO) plans averaged almost $112, HMO premiums averaged almost $133, and PPO premiums averaged almost $150 (employee-only/per month).
- At an average premium of almost $63 (employee-only/per month), CDHPs were significantly lower than other plans.
- When compared to PPOs, CDHP plans were accompanied by lower yearly out-of-pocket costs. For CDHPs, the average yearly out-of-pocket cost was $2,128 for individuals and $5,656 for families. For PPOs, the average yearly out-of-pocket cost was $2,315 for individuals and $5,860 for families.
- The average in-network co-pays with non-CDHP plans were $103 per emergency room visit, $31 per specialist visit, and $19 per primary care provider visit.
By effectively educating employees about potential cost savings from CDHPs, employers can offer employees more control and flexibility related to health care decisions and help them decrease their out-of-pocket yearly expenses.
Implementation Tips For Shifting to Full-Replacement CDHP. Some businesses are offering one or more CDHPs since just encouraging employee enrollment might not be sufficient to create the enrollment numbers necessary for significant cost reduction. Towers Watson/National Business Group on Health found that 8% of employers are currently offering full-replacement CDHPs to some portion of their workforce.
Most experts recommend employers consider several factors before making such a commitment. For example, employers should consider their low-income workers. Do they have families and will they need an employer contribution to a HRA or HSA to ensure they’re protected from exorbitant out-of-pocket costs? Employers should also assess and weigh the challenges that will come from full-replacement CDHP against the costs of crafting a plan to drive voluntary participation rates. Should a full-replacement CDHP be the best option, here are a few suggestions:
- Use focus groups to test full-replacement CDHP. Listen to the employees. Find out what they might need to utilize the plan. Such feedback can be helpful as communications are drafted.
- Don’t forget the big picture. Employers need to clearly and effectively explain how the change is connected to the business’s overall benefits strategy. For example, is there a wellness factor that could be interlinked to the full-replacement CDHP? Employees also need to see how the change plays into their personal big picture, such as from being shown the strong connection between health care decisions and retirement decisions and the benefit of health care expense saving with a tax-advantaged HSA.
- Address the change head-on and keep stakeholders involved in the process. If rumors get started before an announcement is made to employees, it can create confusion and be detrimental to employee support. A news release, whether it be from a media relations firm or internally through HR, should be sent to explain the what and why of the change. Be sure to keep managers, supervisors, and if applicable, union officials in the loop.
- Make any choice among CDHPs meaningful. Also, be sure that the options are differentiated thoroughly so that employees can clearly determine which option is best for their needs and be confident in their final decision.
- Use a combination of print and news media to reach all the workforce generations. Keep in mind that Twitter, Facebook, blogs, and other online portals are freshly-streamed, inexpensive media portals to engage employees.
- Communicate early and frequently, and don’t forget to actually listen and respond. Don’t be surprised by an array of employee reactions. Some employees might be open to CDHP, while others might be fearful or angry. Anticipate all the reactions. Give employees a portal, such as a call center line, to vent, but also give them sufficient information and time to embrace the change eventually. Communication should begin at least three months before annual enrollment and include CDHP tip sheets and user guides.
- Relating is key. Young, single workers aren’t going to plan the same way a middle-age parent or older individual does. Testimonials within communications can help employers reach their multi-demographic workforce.
- Whether using print or other media to communicate employee benefits, ensure it’s done year-round to keep the stream of information fresh and up-to-date.