Account Based Health Plans Save Money for Employers and Employees

Add another term to the employee benefits alphabet soup; Account based health plans (ABHPs) is a catch- all for plans that combine a high deductible with a personal account that can be used to pay for medical expenses not paid by the plan. The National Business Group on Health/Towers Watson Employer Survey created this definition to include high deductible health plans that are offered with Health Savings Accounts (HSAs) and Health Reimbursement Accounts (HRAs).

Whether a high-deductible plan is combined with an HSA or HRA employees and businesses implementing the concept have realized financial advantages. Employees are encouraged to be better health care consumers by making educated choices and being exposed to more details about the cost of care. Lower premiums and smarter usage have added up to better control, and potential reductions of employer costs.

This plan design was a rarity less than 10 years ago. In 2002 only two percent of employers offered the concept. Higher costs, health reform, and better education have dramatically changed the landscape with  more than 50 percent of employers including this option in 2011. The 16^th Annual National Business Group on Health/Towers Watson Employer Survey on Purchasing Value in Health Care reports that an additional 13 percent of all respondents plan to add an ABHP in 2012.

Employers often encourage participation in high deductible plans through reductions in employee contributions towards premiums. The survey found that employers set premium contributions for these plans at least 20 percent lower than those for more traditional plan options offered. Employer deposits into HSAs are also a significant incentive for both selection and plan use.

Now is the time to explore ABHPs for potential introduction in 2012. They can sound complicated so the first step is for the decision-makers on benefits selection to fully understand the product. While you may not be able, or want, to get a firm quote on 2012 premiums in May of 2011 you can obtain some ideas and begin the investigation and comparison of savings options.

The earlier you start the better prepared you will be for employee communications and implementation. Employees can be encouraged now to track expenses through simple spreadsheets that can then be used for comparison and assist with decision making. Improve your knowledge for purchasing decisions and bump up employee education for adoption to realize greater potential for positive outcomes in both employee health and cost savings.