One of the best strategies available to help your business manage health care costs is Consumer Directed Healthplans (CDH). The team at USI Colburn Insurance Service is experts in employee benefits, including CDHs. They were developed to address the root causes of health care increases through real plan incentives for good use of health care, support for people with existing chronic conditions and tools to help members understand health care quality and cost. The basic elements of these plans are a high deductible health plan to protect the member from catastrophic loss and a savings account that can be used to cover routine expenses where the amounts not used can be saved for future healthcare or retirement needs. There are two types of CDH programs primarily available to employers:

Health Reimbursement Accounts (HRA) - HRA’s are an employer provided benefit, where the employer establishes a certain amount of money for employees to use for qualified benefits. Unused amounts can then be added to the benefit in the next plan year. Typically employers are providing a benefit of $500 - $1000 per single and $1,000 to $2,000 per family. These benefits are not allowed to convert into cash, the employee may not contribute to them and the employer can place limitations and exclusions as to what can be covered. The employer only has to provide funding for this account when claims are presented to the plan.

Health Savings Accounts (HSA) - HSA’s are real money contributed to an actual savings account either by an individual, employee or employer. In 2005, individuals can deposit up to $2,650 and families up to $5,250. The contributions are tax-favored. In addition, employers save on FICA taxes and interest earned in the HSA accumulates tax free. The money in the account is available to the employee for qualified expenses, the use of the funds is the responsibility of the employee, and when the account balances grow the employee can then invest their health savings in most investment vehicles (similar to a 401(k) plan). These plans must be combined with a high deductible health plan with deductibles not lower than $1,000 for single coverage and $2,000 for family coverage and the contribution to the HSA may not exceed the plan’s deductible.

Premium savings from the high deductible health plan combined with employees who are motivated to use their health care dollars wisely have provided real savings to employers over the last several years. Regardless, these plans are relatively new and care needs to be taken to insure that the plans are designed to encourage people to seek care when needed and to continue receiving proper preventive care. The better Consumer Directed Healthplans offer preventive care carve outs, debit cards for payment, high quality health care information, wellness programs, disease management programs, nurse hotlines, and other useful tools to help employees make better decisions about their healthcare.

Regardless of whether you want to consider a CDH program or a traditional program, using USI Colburn will lead your business to real savings and individual members of the association can get group rates only through the associations program. We have the product, expertise and depth you need to select the right program.

Clelland N. Green, II, RHU is the Executive Vice President of Marketing for USI Affinity. He has 20 years of experience in insurance sales and marketing, is a national speaker on health care trends and has published articles on Health Care and Technology, Consumer Directed Healthcare, Disease Management and claim practices in Employee Benefit News, HR Executive, and Benefits and Compensation News.

Clelland N. Green II, RHU
EVP, Marketing
USI Colburn Insurance Service
One International Plaza
4th Floor
Philadelphia, PA 19113
800.265.2876