What’s Ahead in 2008 Concerning Employee Benefits

That said, HSAs are “consumer-directed,” an approach that’s quite foreign to most employees, and one that requires financial management. For most people, this means going from total inattention to cost, to making spending choices. In addition, there is concern that saving for medical expenses may not be particularly appealing to lower-paid employees, and in the case of a high deductible, some consumers may delay seeking medical care when it will do the most good.

In other words, employers should not look upon HSAs as a “silver bullet” for solving the health care cost problem. If there is to be success, it will depend upon a high level of consumer education. As Blair Woodbury writes on the Bell Policy Center website, “Enrollees have been people with higher incomes than the average American, and the tax deduction for contributions to an HAS provides little or no incentive for low-income people, who have little or no incentive to open an account.”

4. Innovative ways to control health care costs. Expect to see insurance companies trying out a variety of concepts for controlling costs. Tiered pricing is one example. There’s a lower co-payment if subscribers select this option, which includes providers who meet certain cost and quality benchmarks. A second tier offers a higher co-payment and includes providers who have not met those benchmarks. Another innovation comes from Precedent of Dallas, a division of American Community Mutual Insurance Company in Michigan. Since those with a mini medical plan having a high deductible can face a serious financial situation should they have substantial medical costs, the company has plans allowing participants to purchase additional coverage when exhausting their underlying benefits.

5. Long-term care protection. Individual policies are costly and the trend will be upward in the coming year, as insurance companies re-price products based on experience factors. It’s almost to the point where those who can afford to buy it may not really need it, since they have adequate financial resources to cover costly contingencies. However, expect to find more businesses looking favorably on group long-term care coverage programs. As a company-paid and tax advantaged benefit, it’s emerging as a way to reward and retain valued employees. At the same time, you’ll see more companies paying for basic, low-cost, long-term care coverage and giving employees the option to buy up.