Pairing A High-Deductible Health Plan With An Upfront Benefits Allowance Can Be A Cost-Effective Option For Employers And Employees

By Michael McGuire, Chief Executive Officer, UnitedHealthcare of New Jersey

Some health insurers have introduced an innovative idea that combines the cost savings of a high-deductible health plan with upfront benefits coverage to help pay for some medical expenses before the deductible is met.

These new plans typically give employees a pre-deductible allowance of between $250 and $1,000, but still offer the comprehensive coverage for catastrophic events common to a high-deductible plan. The allowance gives consumers immediate access to covered benefits while lessening the out-of-pocket costs they may have with a high-deductible plan. When using the allowance, plan participants will be responsible only for a copayment.

Under these new plans, the health insurer pays for the eligible medical expenses incurred under the allowance until it is exhausted. For example, if an employer selects a plan that includes a $750 pre-deductible allowance and a $30 copayment for physician office visits, an employee who receives $250 worth of services from a physician would be responsible only for paying the $30 co-pay. The insurer would pay the remaining $220 and credit it against the pre-deductible allowance. Once the $750 allowance is exhausted, the employee begins to pay the deductible.

Most insurance companies are limiting the plan to employers with at least 51 employees.

High-deductible plans, including those without this new upfront allowance, have become more popular because they typically offer lower premiums than plans with no or low deductibles. By combining high-deductible plans with upfront coverage, businesses and their employees can enjoy access to quality health care at a cost-effective price point.

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