Which brings me to why I really like choice in healthcare: I can give money back to my employees and they can buy as much or as little as they want. The technical aspects of this are accomplished through what is known as a Consumer Driven Health Plan (CDHP) and associated tax-advantaged Health Savings Accounts (H.S.A.’s). In brief, a CDHP plan for HelloWallet is the equivalent of replacing this year’s non-deductible health plan at a cost of $350-$900/month for each employee (or family plan) to $200-$600/month, saving $150-$300/month for each employee (or family).
HelloWallet is directing the savings in premiums to be placed into each individual employee’s account for use as they determine. Under this new plan, I’m still coming out of pocket $5K per employee, but now it is a combination of $3K of insurance premium and $2K to the employee to spend on healthcare when and as desired. And if they don’t spend the $2K, as I suspect will be the case for many, the funds will simply roll forward indefinitely, all the way to retirement.
Further, Health Savings Accounts are tax free, consistent with the IRS treatment of employer-provided healthcare, a tax-free benefit provided to employees (i.e. employees are not charged income tax on this form of compensation the way employees are assessed income tax on their salary). And because healthcare spend is such a big item for many people, particularly at retirement where it is often the single largest expense, it is easy to argue that these savings should be inside an individual’s personal financial “portfolio,” much the way we save for general retirement expenses or, shorter term, for our vacations or children’s education.
In closing, the last nine months convinced me the last decade’s rise in healthcare costs and health insurance premiums is a secular trend that may very well span generations. Longer life spans and an increasing desire to remain active to the very end will cause more of our country’s economic resources to be devoted to higher quality of life solutions. However, by changing corporate policy to provide individuals the ability to determine where, when, and by how much they consume these new health and lifestyle products and services – and saving within a tax efficient savings program – we are enabling our employees to not only become better consumers, but also contribute to their financial wellness and ultimately retirement readiness. As such, we think participant choice in healthcare is the only real choice for an increasingly empowered workforce.