Who Benefits Employer or Consumer with High Deductible Health Plans - Case Study Example

Who Benefits "Employer or Consumer" with High Deductible Health Plans Health insurance costs are rising all over the world at indefensible rates and people are looking for ways to save their costs. High-deductible health plans are a great way to save monthly premiums and to provide protection similar to other plans. High-deductible health plan (HDHP): A high-deductible health plan (HDHP) is a health insurance plan with fewer premiums charged and with higher deductibles. This makes this health insurance policy different from others. It means that the insurance holder has to pay the high deductions amount from his own pocket, against the small quantity of compensation as a repayment. These kind of Health plans are suitable for fit/healthy people ,who don’t have any kind of disorder or disease and have a routine to workout. Yoga teachers, gym teachers, sportsmen are the kind of people who would be be more appropriate for this program. Firstly this plan is a low cost health insurance as this plan has a low rate of premium that is paid each month. The rule is that the higher the amount of deductibles the lesser would be the amount of premium charged on the health plans. The second benefit driven out from this plan is that it has several tax benefits, which could be availed by the individuals and family members, only if their health deductible amounts are combined with their health saving account. Furthermore they will also be able to cover their medical expenditures. Employers can choose the type of High deductible health plan for their employees. Not all HDHP plans cover primary care. HDHP are not meant to cover up the specialists and laboratory costs but are rather meant to cover catastrophic events. This protects the consumer from financial disasters in the case of serious medical emergencies. This focuses on expensive medical care ;smaller expenses are not taken in to consideration here. As the HDHP does not offer extensive health coverage, it offers lower premium to its customers. With the high level of deductibles it is considered that members of this plan are less likely to go for a checkup unless seriously injured or ill. Consumers will go to better health centre’s as they pay high deductibles. High deductible health plans involve Health saving Accounts (HSA). For one health saving account is an affordable and easy way to get is medical insurance. A health saving account is a financial account with a a insurance company where you can place money and watch it increase with interest. Consumers can withdraw money from health saving account for medical expenses. You can pay the expense of medical through pre-tax dollars and relive some of the consumers from Tax burden. Health reimbursement Account (HRA) are similar in nature to Health saving accounts but they are controlled by the employers. A HRAs are used to pay for medical treatment, but may be used to reimburse to employees to buy health insurance. HRAs come with a high deductable health plan. HRA have been there for a long time but they are not famous because employees can not contribute to it ;only employer can add value to this account. HRAs are funded only by an employer and are owned by a employer unlike Health saving account (HSA) owned by individuals Many plans sponsored by employers are switching to HDHP to lower the health care premiums paid by employees. The rising costs are forcing employers to switch to their old policies to High deductable health plans. Some employers contribute to health savings account to motivate the employee to make a change. High deductible Health plans or consumer driven health plans are the key to stop the unfair practices and restrictions imposed by health insurance companies, in the form of Health saving accounts (HSA) and health reimbursement accounts (HRA). These plans help save funds through high deductibles for consumers. The customers have more choice to determine the type of coverage they want to receive and get the benefits of having a good health. Consumer driven health plans have certain advantages it has lower premium compare to conventional health plans. Secondly it saves the amount not spend in the following year and adds up in the next year this will help encounter costlier health issues in the future. Individuals who opt for consumer driven plans choose their own type of coverage they want to receive and are not limited to specific physicians. The funds in the health saving account can be withdrawn for non health related activities, but the unqualified withdrawal would be taxed and certain percentage of penalty would be applied. According to the director of the Centre for consumer driven health care, consumer driven plans encourages the people to get knowledge about the health care industry, which leads to improved/better spending and choices. A High Deductible Account plays an important part in increasing financial responsibility for an individual for health care, rather than just imposing high deductible. Leading employers and financial insurers are developing incentives to drive patients to professional medical providers. The target is avoiding large financial burdens on low earning employees or patients through medical expensive medical treatments. Conventional Health Insurance Plan or a High Deductible Plan: Conventional health plans work on systems of deductibles and co pays. This plan focuses on helping consumers/employees in paying their doctors fee, lab test and prescriptions from the day the insurance starts. The initial deductibles are usually very low. A high deductible plan has an amount of high deductible that has to be met before the insurance starts paying for medical expenses. Health of a particular person is very unpredictable. One always needs to cover his/her daily medical expense as it could sometimes be costly and with a High deductible health plan it’s not possible to cover minor accidents. On the other hand the High Deductible health plan is suitable for people with good health who spend less on their health care. Consumers who want lower deductibles and more immediate benefits tend to apply for conventional health plans. Conventional plans are more advantageous for families and older people as they tend to demand immediate benefits. Hence it can be concluded that high deductibles insurance plans are an important alternative to the usual health policy. It Benefits the employees by relieving them of tax burden A High deductible account has lower rates of premium and by using a HDHP one can be secure of catastrophic events and lower the cost of insurance, protecting the employees in helping them achieve expensive treatments with no troubles. Bibliography Advantages of Consumer Driven Health Plans. (n.d.). Retrieved Dec 05, 2010, from eHow: • http://www.ehow.com/list_5882453_advantages-consumer-driven-health-plans.html#ixzz178Pkv0us Caldwell, M. (n.d.). Health Insurance. Retrieved Dec 2010, from Money for 20s: http://moneyfor20s.about.com/od/healthinsurance/f/traditionalorhi.htm Meeker, M. (2009, May). AFSCME. Retrieved Dec 5, 2010, from AFSCME: http://www.afscme.org/issues/1598.cfm Scholasticus. (2010, Sept 3). High Deductibles Health Plans - Pros and Cons. Retrieved Dec 5, 2010, from Buzzle .com: http://www.buzzle.com/articles/high-deductible-health-plans-pros-and-cons.html Read More