Mind the Gap: Synergy Between CDHPs and Voluntary Benefits 

As inflation and rising health care costs continue to erode the value of an employer’s benefits dollar, cost-effective consumer-directed health plans (CDHPs) are gaining in popularity. In fact, Mercer’s most recent National Survey of Employer-Sponsored Health Plans found that 66% of large employers expect to offer a CDHP by 2017. But while CDHPs can help an employer align its benefits strategy to the ACA and remain under the excise tax cap, they expose employees to wider gaps in coverage and higher out-of pocket expenses.

The impact on employees is magnified because personal savings are at an all-time low. When an unexpected health event occurs, many employees lack adequate savings to pay the out-of-pocket expenses. In a recent Mercer survey, 39% of US employees enrolled in company health plans said that their out-of-pockets costs were either “not affordable” or “not easily affordable.” When asked to think ahead five years, 59% of employees foresee having difficulty with out-of-pocket health care costs.

To help buffer the impact on employees and accelerate CDHP adoption, employers are turning to a specific set of voluntary benefits — accident, critical illness, and hospital indemnity — that can be used to fill gaps in CDHP coverage and reduce cost exposure.

Here are just a few ways that these supplemental health voluntary benefits help employees:

• A set amount is paid directly to the employee, independent of any other insurance coverage. The payment can be used by the employee to cover health- or nonhealth-related expenses.

• Supplemental health coverage can be tailored to include additional wellness benefits and extended to include dependents.

• Premiums are typically group-discounted and can be billed via payroll deduction.

And post-tax voluntary benefits aren’t counted in the excise tax calculation. That means that while these supplemental health benefits can be of material help to your employees, they won’t derail your excise tax avoidance strategy.

In fact, voluntary benefits can have a role to play in many HR challenges: talent retention, employee financial wellness, unique executive risks, addressing the needs of a multi-generational workforce … the list goes on. If you’re thinking about pairing voluntary benefits with a CDHP, you might think about these other opportunities as well.