During the 1990s managed care contained costs, but eventually healthcare expenditures began to rise, the ability to manage was constrained, and the consumers were disgruntled. Healthcare cost continued to rise due to technological advances and inflation. Some advances during that time included: drug therapies, increased number of outpatient visits, higher consumer demand, administration costs, government mandates, and the aging of our population (Fox & Kongstvedt, 2007, p. 14). Many companies enrolled their employees in managed care even though the workers wished to have another form of healthcare coverage, but they lacked the choice. Consumers often times had issues with getting managed care to cover their doctor visits, denials for specialties,
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Following health maintenance organizations (HMOs) and preferred provider plans (PPOs), more employers were switching the healthcare benefits for their employees to CDHPS. Consumer directed health plans (CDHPs) were created to lower health care costs, improve the quality of received healthcare, and give the consumer the better ability to make decisions regarding their healthcare. Although there are many different forms of CDHPs, the shared thing behind them is a high-deductible heath plan that works with an out of pocket cost spending account. These accounts allow the consumer to make the choice behind their healthcare, while placing money, pre-taxed, from their paychecks into it. There are three types of accounts available: Health Savings Account (HSA), Health Reimbursement Account or Arrangement (HRA), and a Flexible Spending Account …show more content…
The employee places money into an account to cover the out of pocket medical care expenses, but it may not cover premiums. Although employers can also place money into an employee’s FSA, there is no requirement for them to. Just like the other accounts discussed, there are limits on how much money a person can place into an account. Per year an employee can only place up to $2,550 in an FSA, this funding can pay for medical, dental, vision, deductibles and copayments (Healthcare.gov, n.d.). Dependent on the specifications of the employer there are options that they can offer for remaining money in a FSA when the years’ time is up: a grace period to use the money for medical expenses, a carryover of $500 for the new year, or neither. When the years’ time is up if there are no options placed by the employer, the money is then forfeited.
Differences between an HSA, HRA and FSA
Account HSA HRA FSA
Who owns it? YOU EMPLOYER EMPLOYER
Can be used on deductibles or copays? YES YES YES
Can be used on premiums? NO NO NO
Limits on how much you place in it? YES NO-employer places money YES
Who puts money in it? YOU EMPLOYER EMPLOYER
Does it rollover to a new year? YES NO NO
Can it be cashed out? YES NO NO
Can I keep it when I leave a job? YES NO NO
Can it earn interest? YES NO
Following health maintenance organizations (HMOs) and preferred provider plans (PPOs), more employers were switching the healthcare benefits for their employees to CDHPS. Consumer directed health plans (CDHPs) were created to lower health care costs, improve the quality of received healthcare, and give the consumer the better ability to make decisions regarding their healthcare. Although there are many different forms of CDHPs, the shared thing behind them is a high-deductible heath plan that works with an out of pocket cost spending account. These accounts allow the consumer to make the choice behind their healthcare, while placing money, pre-taxed, from their paychecks into it. There are three types of accounts available: Health Savings Account (HSA), Health Reimbursement Account or Arrangement (HRA), and a Flexible Spending Account …show more content…
The employee places money into an account to cover the out of pocket medical care expenses, but it may not cover premiums. Although employers can also place money into an employee’s FSA, there is no requirement for them to. Just like the other accounts discussed, there are limits on how much money a person can place into an account. Per year an employee can only place up to $2,550 in an FSA, this funding can pay for medical, dental, vision, deductibles and copayments (Healthcare.gov, n.d.). Dependent on the specifications of the employer there are options that they can offer for remaining money in a FSA when the years’ time is up: a grace period to use the money for medical expenses, a carryover of $500 for the new year, or neither. When the years’ time is up if there are no options placed by the employer, the money is then forfeited.
Differences between an HSA, HRA and FSA
Account HSA HRA FSA
Who owns it? YOU EMPLOYER EMPLOYER
Can be used on deductibles or copays? YES YES YES
Can be used on premiums? NO NO NO
Limits on how much you place in it? YES NO-employer places money YES
Who puts money in it? YOU EMPLOYER EMPLOYER
Does it rollover to a new year? YES NO NO
Can it be cashed out? YES NO NO
Can I keep it when I leave a job? YES NO NO
Can it earn interest? YES NO