2.5 minute read
Rising healthcare costs, including prescription drugs, challenge employees' ability to afford necessary care. High deductible health plans (HDHPs) offer manageable premiums but increase financial risk until deductibles are met. Employers can adopt various strategies to help employees manage out-of-pocket expenses. These strategies include:
Offering a Low Deductible Health Plan
High deductible health plans (HDHPs) are popular for their lower premiums and compatibility with Health Savings Accounts (HSAs), offering tax-free savings for out-of-pocket expenses. However, if employees face challenges with pre-deductible costs, employers might consider low deductible plans, which, despite higher premiums, reduce out-of-pocket risks. These plans suit employees with significant health care needs, offering predictable costs. Employers can enhance their benefits by providing multiple plan options, catering to diverse employee needs and financial situations.
Contributing to a Health Savings Account (HSA), Health Flexible Spending Account (FSA) or Health Reimbursement Arrangement (HRA)
Employers can assist employees with out-of-pocket medical expenses by making tax-free contributions to medical savings accounts. These accounts, paired with group health plans, cover expenses not included in the health plan. The three main types are HSAs, FSAs, and HRAs, each with unique legal requirements and benefits. HSAs offer flexibility and portability, FSAs allow joint contributions but require more employer involvement, and HRAs are fully employer-funded with potential fund carryover.
Allow Hardship Distributions from Retirement Accounts
Employers can offer hardship distributions in their retirement plans to assist employees with medical expenses. These distributions, available in plans like 401(k) and 403(b), allow withdrawals during financial hardships without repayment. Eligibility requires an immediate financial need, often verified through IRS guidelines. Note, these distributions are taxable unless from Roth contributions and may incur penalties for those under age 59 1/2.
Educating Employees About Health Coverage
Employers can assist employees in managing medical expenses by enhancing their understanding of health coverage and reducing out-of-pocket costs. Review and update educational strategies to fill knowledge gaps, covering essential topics like insurance terms, network differences, and maximizing benefits. Use diverse communication channels to reach all employees effectively. Practical tips include contributing to HSAs or FSAs, using in-network providers, leveraging free preventive care, opting for telehealth, consulting primary care for non-emergencies, requesting generic drugs, comparing prescription prices, and seeking manufacturer coupons.
Offering an Employee Assistance Plan (EAP)
Consider offering an EAP to support employees with medical bills and personal challenges. EAPs connect employees with resources like mental health counseling, financial advising, and legal services, enhancing their health and job performance. Typically provided at no cost through third-party vendors, EAPs help maintain a productive workforce.
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