Navigating Benefits

Introducing a Low-Deductible Health Plan to the Workforce

  • Low-deductible health plans have a higher monthly premium, but lower deductibles and out-of-pocket costs

  • Older employees, pregnant employees or employees with children (or chronic health conditions) may prefer these plans

  • Introduce it to your organization as an alternative plan, and educate staff about the cost differences in the long-term

Posted by February 27, 2019

A low-deductible health plan (LDHP) can offer your organization’s workforce a number of benefits that might not be found in a high-deductible health plan (HDHP). Here’s a look at what an LDHP plan is, as well as strategies for introducing the new offering to your fellow employees.

So, What Is a Low-Deductible Health Plan?

Low-deductible health plans have lower deductibles—as the name suggests—along with higher monthly premiums and potentially lower out-of-pocket maximums (OPMs) before the plan kicks in to cover 100 percent of medical expenses. In contrast, HDHPs have lower monthly premiums, higher deductibles and sometimes higher OPMs, too.

Typically, HDHPs are best for healthier individuals who just want a plan to fall back on in case of an accident or major illness, so they aren’t hit with hundreds of thousands of dollars in medical costs. HDHPs could have deductibles as high as $5,000 or more, even though the minimum deductible to be considered an HDHP by the IRS is $1,350 for an individual.

LDHPs are great for individuals who may need to see a doctor more frequently and would prefer to have their expenses covered right away. In general, the older an employee is, the more likely they are to prefer an LDHP. As soon as they reach their deductible, insurance will cover more of their doctor’s visits, lab work, visits to specialists and scans. The lower the deductible, the faster an individual will get to enjoy the extra coverage. The only downside is that members can’t have a health savings account with an LDHP, but they can have a flexible spending account (FSA), which is similar.

Introducing an LDHP to Your Colleagues

If you’re introducing an LDHP to your organization for the first time, it’s typically best to roll it out as an alternative to an HDHP rather than a replacement. The difference in monthly fees between an LHDP and an HDHP can be significant, so you don’t want your fellow employees to feel any sticker shock. Offering an LDHP and an HDHP could even help you position your company be more competitive in hiring new talent, because many larger employers tend to offer both.

You’ll also want to help your colleagues understand all the benefits they’ll get from an LDHP. Explain that this plan can make employees’ medical expenses more predictable and easier to budget for; they won’t have to worry about being hit with a large out-of-pocket expense if they get sick. These plans can provide significant financial benefits for older employees, anyone with chronic health issues, employees who take expensive medication or need surgery, employees with small children as well as those who are pregnant (or planning to be pregnant).

To help these employees know how much they’d save, you can compare the costs of an LDHP and an HDHP for hypothetical individuals in different health scenarios. This can help staff see beyond the monthly cost. Ask your organization’s health care broker to help you put together an expense comparison sheet.

Explaining the Benefits of an LDHP

LDHPs may offer better coverage than a high-deductible plan, such as a larger network, telehealth options or better coverage for medications. Be sure to look at the fine print to see what an LDHP covers versus an HDHP. You’ll also want to include a list of the differences, so your employees can see what they’re getting.

When introducing a new plan, the best approach is to call a meeting, explain the new option and share a detailed summary of benefits. The summary of benefits should then be made available both online and in a printed form. Afterward, consider having a health care advisor available to meet one-on-one and answer follow-up questions.

As you can see, a low-deductible health plan can greatly benefit your company’s workforce, but it’s best to introduce it alongside your current plans rather than as a replacement. With proper education and insight, many of your fellow employees will likely be interested in switching!

Looking for tools and resources that can help your colleagues manage their dental benefits? Check out the Employer Toolkit hosted on United Concordia Dental’s website.

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