There is a "new" way to provide medical benefits to your employees. It is called Health Savings Accounts (HSA). Actually, it is not new. It is just the next generation of plans known as Consumer Driven Health Plans (CDHP). In a CDHP employees are insured by a high deductible health plan. Because the deductible is high, the premium cost is dramatically lower.

Some of the premium savings is deposited into a Health Savings Account for each employee. Employees can use the savings to pay for medical expenses they incur that are less than their deductible amount. The balance of the premium savings is retained by the employer. The theory behind HSAs and CDHP is simple; if the patient is responsible for paying the medical bill, they will be wiser consumers. We all know the difference between OPM (other people's money) and MOM (my own money)! Companies using Consumer Driven Health Plans report a reduction in claims of 18% overall.

Another important aspect of these plans is that your employees are protected against catastrophic claims by the high deductible health plan. There is no concern that employees could be financially devastated by large medical bills.

The following illustrates how a HSA compares to traditional funding:

Funding to the HSA can be increased or reduced each year depending on business objectives and future insurance rate increases.

Benefit Plan Alternatives has sold and administered high deductible/self funded plans for over 30 years. We understand how and why they work to hold costs down. HSAs are another version of that strategy.