HRM DIS - 3

According to a recent survey, by the National Business Group on Health, health care costs are expected to rise approximately 5% in 2020 at an average of $15,375/year per employee (Mercado, 2019). Both employee and employer are sharing this burden in increased rates, with the employee bearing approx. $4500 of this total (Mercado, 2019). Many large organizations have switched from PPO (preferred provider organizations) to HDHP (high deductible health plans) to help offset the rising cost of healthcare. These particular plans are typically accompanied by HSA (health savings accounts) in which an employee can make tax free contributions from their paychecks (Simon, 2019). These accounts are not only tax free but interest free and belong to the employee (Simon, 2019). HDHP’s are less expensive for employers because they come with lower premium costs and more of the healthcare cost is placed on the employee (Simon, 2019). This can also be advantageous for employees if they are young and relatively healthy (Simon, 2019). They are not paying premiums for services that they are not utilizing. However, employees that suffer from chronic conditions and frequent health care needs are better served by higher premium, lower deductible PPO plans (Simon, 2019). I believe, as an employer, offering your workforce both options is the best method. It allows you to educate the young and healthy on the advantages of HDHP plans and how both can save in the long run as well as the safety of the PPO plans to those that may need more frequent health care. Organizations are being challenged to find new ways to lower health care costs as we continue to face this upward climb in health care expense. Promoting wellness plans to advocate healthy lifestyles is another idea that organizations are deploying. Smoking cessation programs, premium discounts for annual physical examinations, and exercise challenges are just a few of them.