Launching a consumer-driven plan in a company can be a little tricky, but GCI, a telecom firm in Alaska, has figured out how to make the transition smoother.
It takes a while for a company’s monthly contributions to a Health Savings Account (HSA) to build up, which can be disadvantage for an employee who incurs an big medical bill early on.
Say the health plan has a $2500 deductible per member and a $2500 off-setting HSA (fairly average levels), and the early bill for a colonoscopy comes in at $2000. If only $1000 has built up in the HSA, the covered employee would have to pony up the other $1000 out of pocket.
To solve that deficit, GCI simply makes a loan to the employee, which is then paid back out of future HSA contributions by the company to his or her account. Problem solved!
About seven out of 100 Americans are hospitalized each year, which is when the big hits against deductibles happen. So the slow build-up in the HSA could affect a significant number of new HSA owners.
Over time, the HSA totals grow. Some now have six-figure balances, growing on a tax-free basis. Once there is a reserve in the account, then loans are no longer necessary.
There is a major stampede under way in the nation toward consumer-driven plans that incorporate HSAs and high deductibles. Estimates range from 13 million to 20 million current HSAs, with 10% to 15% being added each year. More than half of private sector employees are estimated to be in such plans.
There are even a growing number of public sector employers going CDHP, because incentives and disincentives make a huge difference in how employees utilize and purchase health care. Savings can be more than 20% of total health costs. That’s a big deal for governmental bodies that simply can’t stand the pain of rising health benefits any more.
A loan program like GCI’s will grease the skids a little more for the consumer revolution in health care.