Consumer Directed Health Plans

Consumer Directed Health Plans (CDHP’s) can significantly reduce health insurance costs by shifting benefit dollars for most routine services to the consumer while providing major medical protection against catastrophic loss. These plans can reduce overall plan costs by 15% to 40% or more in some cases!

Kimmel Benefits can assist you in determining if CDHP’s are right for your company and provide all the services to design, install and manage these innovative programs.

These plans can take many different forms. Provided below are a few examples of common CDHP’s:

  • Health Savings Accounts (HSA’s) – HSA’s are savings accounts that can be used to pay for qualified healthcare expenses when combined with a qualified high-dollar deductible health plan. Funds in the HSA are tax-favored, 100% portable, and unused funds roll over to the next year. These plans are priced much lower than traditional plans and are now offered by several local carriers.

    • Example: Winery, 4 employees
      This group had coverage through managed care plan with a major local carrier and received a 30% rate increase at renewal. We presented a Health Savings Account option (HSA) that resulted in a potential rate reduction of 21.9% from their in-force rates!

    • Example: Fishing Products Manufacturer, 2 employees
      This group replaced their coverage with a national association plan with an HSA. They were able to keep their rates competitive and create tax-favored medical savings accounts.

  • Healthcare Reimbursement Arrangements (HRA’s) – HRA’s are employer-designed and funded accounts that provide funds to pay for qualified healthcare expenses. The flexibility of HRA’s allow the employer to “self-insure” specific benefits and even provide a rollover feature so that unused funds can be used in the next plan year. These plans are simple to design and very inexpensive to administer.

    • Example: Healthcare Products Distributor, 10 employees
      Due to financial difficulties this group was looking for ways to lower their benefit plan costs while maintaining a very rich medical plan. The group cancelled their dental and vision plans and “self-funded” these benefits using an HRA. The HRA allowed the company to continue to offer these benefits at a significantly reduced cost.

  • Flexible Spending Accounts (FSA’s) – FSA’s allow employees to set aside funds on a pre-tax basis to pay for qualified healthcare expenses such as the deductible and co-insurance or specific benefits like vision hardware and orthodontia. Plans are simple to design and inexpensive to administer.

    • Example: Medical Clinic, 80 employees
      This group doubled their medical plan deductible due to a renewal rate increase. In conjunction with this change they offered an FSA to give employees the ability to set aside pre-tax dollars to pay for un-reimbursed medical expenses. The participation rate in the FSA was over 40% and the employer saved over $4,000 in FICA savings!