We got a question in response to our post Checklist: Want to Increase Your CDHP Enrollment? Try This.
Q: How? If my execs are enamored with PPO.
A: One of the key tenets we pursue in helping clients develop a CDHP strategy is to focus stakeholder attention on what would change, and what would not. In the case of moving from a traditional PPO to a CDHP, the change could be focused entirely on just a couple elements. For example, there’s no requirement for a change in:
- Plan actuarial value
- Covered expenses, or
- Out-of-pocket maximums.
In fact, one preferred approach is to install CDHPs that are approximately equal in actuarial value (AV) to a competing traditional plan, but which offers employees lower premium contributions (because their utilization will generally subside in a CDHP vs. a PPO) and, in the case of an HSA-compatible plan, the opportunity to contribute to and accumulate a portable, tax-protected account that’s generally superior even to their 401(k).
While many employers hesitate to pursue a CDHP strategy because account-based plans can appear to simply be (or, if poorly-designed, can actually be) a means of cost shifting to members, they don’t have to be so, at all. In fact, we generally try to avoid use of CDHPs as “low value” plans, but rather encourage clients to position their CDHP offering(s) to compete with more traditional plan options on AV as well as premium contribution. Further, we see and help many employers move to strategies that reward positive health behaviors through HRA/HSA funding by the employer. These strategies provide first-dollar HRA/HSA funding to offset higher deductibles for those exhibiting healthy behaviors.
Finally, with the rapid expansion of CDHP offerings we’re seeing among employers, it’s likely your company will begin competing for candidates who’ve been enrolled in a CDHP and may even have an HSA balance they’d like to port with them to your company, and in which they’d like to continue contributing. By not offering them the opportunity to enroll in a CDHP – particularly an HSA-compatible version – you may inadvertently be inhibiting your ability to attract quality candidates whom you’d like to hire.