Understanding CDHPs, HRAs and HSAs
Karen Gustin, LLIF, Ameritas Group Dental and Eye Care
Are these health benefit options right for your company?
CDHPs, HSAs, HRAs … these acronyms are regularly tossed around by the news media, insurance professionals and federal officials with the assumption that everyone understands these health-care cost-savings options. Feedback from business leaders indicates that many have heard the names, but they’re unsure as to exactly what the options are, whether they are the right fit, or how to implement them.
Consumer-Driven Health Plans (CHDPs) were designed with the goal of encouraging Americans to become active participants in their health-care decisions. Initially the concept was broadly applied to defined-contribution plans. Employers offered several plan choices — some with a fixed contribution from the company — with employees expected to pay the balance.
In 2002, Health Reimbursement Accounts (HRAs) were created so employers could contribute tax-exempt funds for employees to use to pay eligible medical expenses. These accounts earn interest and may be carried from year to year. Health Savings Accounts (HSAs) were added a year later to encourage employees to set up personal savings accounts to pay for current health-care costs with pre-tax dollars and save for future medical expenses.
Businesses that have adopted consumer-driven plans say announcing the availability of an HSA or HRA to employees is not enough. Employers must help employees take ownership of their health benefits by proactively communicating plan options and savings.
Plans catch on
As of first-quarter 2006, 62 percent of companies with a consumer-driven plan provided an HAS, and 38 percent offered an HRA plan option to employees. Approximately 75 percent of Fortune 500 companies expects to offer a consumer-driven plan with an HSA or HRA option in 2007.
Many employers offering HSA/HRA plans have noticed that first-year enrollments are typically low, but participation significantly increased in subsequent years, mainly due to word-of-mouth endorsements for the plans by other employees. As employees gain experience with these plans, they like the idea of being responsible for their health-care choices. However, they want to know how much health-care options will cost, especially since they will be writing the checks.
Communication is crucial
Employers experienced with consumer-driven plans make these recommendations for successful communication with employees:
Initiate employee communication programs six months in advance of the enrollment period.
Target messages to reach different groups of employees.
Develop a regular communication schedule, in different formats and locations, in order to break through the communication clutter and reach employees with key messages.
Dedicate employee resources to answer questions, especially in the initial phases.
Provide lists of resources for employees to research information online, such as www.eDoctorsOnline.com or www.WebMD.com.
Give details on how employees can effectively use their HRA and HSA programs.
Cite examples of how employees can access cost-effective, high-quality care.
Employees take control
Employees have more options for managing their health care than in the past, such as limiting doctor visits by buying over-the-counter kits to diagnose or treat common ailments, or participating in screenings at health fairs or commercial testing centers. The Internet also provides consumers with a wealth of health-care information and discount pharmacies.
Preventive care has become the trend. Employees have become more active in controlling risk factors, behavioral causes of disease and participating in wellness programs, realizing that lifestyle decisions may impact their costs and health status.
Solve the mystery
CDHPs, HRAs, HSAs are excellent options to give employees control over their medical decisions and expenses. However, employers must provide excellent communication to take the mystery out of these plan options and help employees feel comfortable choosing the right options for their families.
Karen M. Gustin, LLIF, is vice president-group marketing and managed care for Ameritas Group Dental and Eye Care in Lincoln, Nebraska. Her tenure with Ameritas Group spans 23 years. She’s involved with the National Association of Dental Plans (NADP), serving on the foundation board and chairing the Statistical Task Force.