Kenneth Giaquinto
Money-saving Healthcare Acronyms
Q: How can I counter the rising costs of healthcare premiums for my employees. Should I look at a plan with higher deductibles? How about HSAs?
A: Alarming but true: According to the Kaiser Family Foundation, healthcare premiums are rising five times faster than wages or inflation. A good way to counter these rising costs is with the increasingly popular high-deductible health plan/health savings account (HDHP/HSA). Industry experts estimate that the HDHP/HSA combination can save companies as much as 20% to 30% annually.
HDHP/HSAs work this way. High-deductible health plans provide coverage to employees for catastrophic illnesses and reduce premium costs for employers compared to traditional plans. While regular preventative visits are covered, other visits to medical providers and medications are paid for by the employee until the deductible is reached. To help pay for those services, plan participants can open Health Savings Accounts, which allow them to put away money pretax and use it for medical expenses.
HSAs are surprisingly flexible. Health Savings Accounts remain in force even after employees change jobs or insurance plans. Also, unlike flexible savings accounts, the funds in HSAs can roll over after the end of the year, creating a reserve against future healthcare expenses.
HDHPs can free up benefit dollars. The savings realized by moving from a traditional plan to a high deductible may allow your business to contribute to your employees’ HSA accounts, encouraging the transition. Your contributions to your employees’ HSAs are tax deductible for your business.
These plans encourage wellness and careful spending. Traditional health plans have no real incentive to economize. People with HDHP/HSAs tend to make proactive, healthy decisions in areas such as weight loss, exercise, and smoking. Granting consumers the power to make individual decisions about how to use their own healthcare dollars typically reduces the amount they spend, allowing savings to accumulate in their HSAs.
While HDHPs and HSAs are not the right option for everyone, they are worth looking into as a way to support your employees while still holding down healthcare costs.
This Month’s Expert: Kenneth P. Giaquinto
Relationship Manager, KeyBank Maine District
Kenneth P. Giaquinto is relationship manager for Key@Work, which offers free and discounted banking services for companies to offer to employees as part of their overall benefits package. Giaquinto has 30 years in the insurance and banking industries and has extensive experience in life, disability, and employee benefits. He is a Certified Consumer Directed Health Care Specialist. He lives in Portland.
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