Consumer Driven Health Care research highlights misconceptions, incorporates lessons into plan offering
by Bruce ShutanWith open enrollment season around the corner, there's no better time for brokers and advisers to promote consumer-driven health care plans (CDHPs) for cash-strapped clients and help them gain a competitive leg up.
"People are very focused on saving money right now, so we believe the economy is a bit of an accelerator to helping position CDHPs as a real solution," observes Tim Bireley, vice president of group medical for The Guardian Life Insurance Company of America.
In a recent survey of more than 1,000 working Americans that examined attitudes toward CDHPs, Guardian found that a broad misunderstanding of the concept points up the need for more thoughtful employee education. Those research findings also were incorporated into a product offering that sought to address customer needs.
Lower premiums
A key finding was that 44% of the respondents mistakenly thought CDHPs were too expensive when, in fact, their health insurance premiums can be anywhere from 20% to 40% less expensive than a traditional plan while employers see lower medical trend. Bireley says employees appear to be fixated on the high deductibles associated with these plans and are under the false impression that they always result in higher out-of-pocket costs.
Much emphasis is placed on the out-of-pocket costs triggered by the deductible, he notes. But it's important to consider the cumulative financial impact of office visits and prescriptions under a traditional PPO. For example, a monthly prescription for a brand medication with a $50 copay adds up to $600 a year, which doesn't track toward the deductible.
Several key features in a CDHP are also often overlooked. For example, plan participants' share of premium payments are much lower, and they can divert some of this savings to health savings accounts (HSAs) to help them budget for uncovered expenses on a pretax basis. In Guardian's plan, there's also a strong preventive-care component that covers 100% of annual checkups and preventive screenings with no maximums.
When conducting the CDHP research, Bireley says Guardian "tried to understand what the pain points or educational gaps were to make our product as strong as possible."
One of the ideas suggested by the research was that brokers and advisers encourage their clients to invest a portion of CDHP premium savings into an HSA, which can motivate employees to enroll and become more responsible health care consumers. Another was to automatically set up HSAs to make it as easy as possible for employees to sign up. With Guardian's plan, employees simply go online to activate their accounts.
Whenever possible, employers should consider offering additional low-cost benefits that can turbo-charge the overall medical benefits package, says Bireley. Critical illness insurance can provide employees with funds to pay for both medical and non-medical costs associated with a serious illness before they're able to accumulate enough of a balance in their HSA.
Critical illness insurance can help ease employee anxiety over moving from, say, a $250 deductible to $2,500 deductible. This coverage provides a lump-sum payment that can be used for any reason - from covering medical costs below the deductible, to child care or travel expenses or to make up for a spouse being out of work. Some policies even provide a daily payment of up to $500 for extended hospital stays unrelated to a critical illness.
Better education
The key to success, of course, is employee education. When communicating the benefits of a CDHP, producers need to explain that the approach preserves the underlying insurance chassis of a traditional preferred provider network without disrupting the patient-physician relationship. Bireley says the only real significant difference is that consumers are finally armed with more information to better address their care needs and of course, a higher deductible that is balanced by using an HSA to pay for first-dollar expenses.
A team effort has proven highly effective in getting across these messages. Guardian's field-based certified employee benefit advisers are available to run open enrollment meetings, and its toll-free hotline helps each participant fully understand the CDHP concept and maximize their benefits. Education is especially important with these plans to help turn employee populations into better health care consumers, Bireley observes.
"An ounce of prevention is worth a pound of cure, and so if we can educate them on the front end, we feel there will be a much better overall member experience," he says.
This year, Bireley expects Guardian's CDHP sales could double based on how the concept is gaining acceptance in employee populations as either a stand-alone offering or option alongside other plans. The latter scenario allows employers to test-drive the concept before deciding whether to replace a traditional offering after one or two years.
Guardian's CDHP research can be downloaded at www.GuardianBenefits.com.
About the author
Bruce Shutan, former managing editor of Employee Benefit News, is a freelance writer based in Los Angeles.
