The role of CFO has been pushed to the forefront in recent times like never before in history. As the position has evolved over time, it has never been besieged by an economy in quite the way the recent downturn has seen. Luncheon Awards like this publication’s recent Woodland Hills event show that, when gathered together, a true strategist begins to emerge. The picture of a room full of financial experts talking best practices and truly sharing stories of grabbing a company from the brink, righting the ship and now poising for the prosperous times we can now mathematically dare to hope for was an encouraging scene to be a part of.
Consulting for businesses on a product that is invariably in their top 3 expenses, the insurance policies, it’s clear that now is the perfect time to address costs in this arena.
It was not uncommon for a company in the last three years to give comments like, “We are just hunkering in” or “Changes?! We’re just trying to survive!” But with the hands-on approach active CFO’s have taken, many companies are looking at this season as one to re-evaluate some things that may have gotten a pass while other items’ urgency saw them dominated the meeting requests.
Of all of the ways people discuss cost saving on insurance policies, be it Property & Casualty, Workers’ Compensation or Employee Benefits, one seems a particularly good fit for immediate injection with minimal disruption—Health Savings Accounts, or “HSA” plans.
First and foremost, HSA plans do not have to be implemented as the only medical option. Companies are free to simply add the option beside their in-force HMO/PPO duel option insurance benefits. This might be the year to offer it as an additional option, and have a good education session with employees about the positives.
HSA plans allow employees access to the PPO world, and the freedom of choice that comes with it, for a much more reasonable price. Obviously, by design, they come with a high deductible and that often scares people off.
What’s important to note about the HSA plan though, is in most cases, they come with a lower out of pocket maximum than their Traditional PPO counterparts. This means, not only does the healthy employee who only gets the free preventive care benefit from a plan like this, but the very high utilizer, whose expenses would blow through the out of pocket maximum on any PPO gets to a 100% coverage point much quicker. When you add to this the ability to use employer funds in some cases and federally tax-free money is all qualified cases, the employee might actually find that not only is the plan less premium ,but it’s also ultimately less annual out of pocket.
As one of the company’s main strategists, it’s important to stay abreast and have in-depth conversations about this world. The Medical Loss Ratio (MLR) on these plans tends to run much more profitably due to the high deductible. The bottom line is, with Health Care Reform pushing MLR’s into the conversation about future planning, it’s important to examine the positives of these plans, rather than assume the high deductible will be too intimidating.
Studies have shown that education is actually the greatest driver of positive sentiments about your benefits program. As an agency, we have overseen not just adding the HSA to the offering, but doing a wholesale replacement so it’s the only option, and we have done so for groups as sophisticated as Hedge Fund Managers and as blue collar as building maintenance workers. In all cases, what’s proven by an active and engaging education system is that the benefits of a plan like this can be grasped and even welcomed.
With an economy pushing the CFO role into a more and more active place and Health Care Reform making us all take a hard look at the way America receives Health Care, maybe it’s time to look at these plans. With Health Care Reform, all Non-Grandfathered plans will have free preventive care, but these also have a low out of pocket maximum should it be a tough year, and in the cases where members gets a couple of bucks from the employer to buy the odd antibiotic here and there, they can make even more sense.