Colorado Health Insurance - HMO Information

. . . . JANUARY 2005. . . .

Great Expectations
Employers Watch, Wait as CDH Demand Grows
ndustry watchers expect most businesses to spend the coming months evaluating what’s out there and, if they opt to offer Health Savings Accounts (HSAs), drafting education programs to prepare employees for annual enrollment by 2006 or 2007. If things fall into place as expected, about 73% of U.S. employers are likely or somewhat likely to be offering HSAs by 2006, according to a Mercer survey.

HSAs are seen as a way to curb runaway medical insurance costs while giving people more control over what they spend and where they spend it. Even so, most of corporate America is watching and waiting to learn from the successes and mistakes of early adopters.

The combination of three key factors—four consecutive years of double-digit rate hikes for health coverage, the IRS’ 2002 landmark ruling regarding the tax treatment of employer-funded HRAs, and the HSA provision of last year’s Medicare reform law—have contributed to what can best be described as the perfect storm in the health insurance industry, according to Steve Davis, managing editor of Inside Consumer-Directed Care (ICDC). “That environment has created a tidal wave of interest in these account-based plans.” Consequently, Davis notes that enrollment in HSA- qualified high deductible health plans is expected to quadruple to more than 2 million members by January 1, 2006.

The trend toward consumer-driven healthcare does not signal an end to traditional managed care and preferred provider plans. Rather, it is changing how these providers do business. According to the Milliman 2004 Group Health Insurance Survey, carriers are aware of the shifting market trends and are making adjustments to their HMO and PPO offerings while simultaneously introducing CDH offerings in greater numbers for 2005.

CDH Products
In general, HMOs and PPOs will evolve to have greater employee cost-sharing at point of care, and the degree of efficiency between them and CDH will be small, according to Towers Perrin. The new CDH products feature a variety of approaches, including high-deductible plans, integrated employee accounts such as HRAs and HSAs, tiered-provider networks, self-selected networks, self-selected benefits, sharing of price and quality information on hospitals and physicians, and education for the various options available to members.

Despite outside pressure to plunge in, industry experts counsel large and small employers to take their time determining what’s best for their situation and employee base. Also, spend time to develop a communication plan that will be helpful to all employee cultures as education is critical to employee acceptance of HSAs.

Voluntary Products to Complement Your Core Package
Find out how Gemini Group can help you implement a voluntary benefits package that will complement your company's core benefits.

Three of the most important objectives for an employer in managing personnel issues are:

Attracting and retaining loyal workers
Providing employees choice and security in their benefits package
Managing the organizations dollars

Voluntary benefits have proven to be important offerings that address each of the three objectives. Selecting the right benefits, communicating them properly and administering them efficiently is the Gemini advantage.

Gemini is licensed with over 20 of the largest voluntary companies in the country thus allowing us to pick the carrier and product to fit your company’s needs. We seek to achieve the right balance that ultimately helps your organization better manage costs and attract and retain loyal workers.

The HRinsider SM bulletin is brought to you each month courtesy of Gemini Group Inc., a UBA member.

For more information, contact us at info@geminigrp.com

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