Albert Johnson Cases

Albert Johnson, Director of Compensation at Elite Financial Services, has some strategic decisions to make in an effort to decrease the costs of their current employer-sponsored health insurance plan. The company has not done much in the past to control the costs of healthcare, so employees are used to certain perks such as only paying 10% of the total costs of the health insurance premium, and low deductible and co-insurance expenses. Making changes to current benefits may be somewhat unsettling to employees, but there are times when it is necessary in order to drive costs down. Albert Johnson must find the proper balance between transferring some of the premium costs to the employees, and setting up wellness incentives to drive claim experience

The premiums for high deductible plans are much lower and in turn the employee could save the money they are saving in the premiums into a Health Savings account for their deductible expenses. According to Investopedia “A Health Savings Account (HSA) is like a personal savings account, but the money is used only for qualified healthcare expenses…To be eligible for an HSA, you must be enrolled in a special health insurance plan called a High-Deductible Health Plan, or HDHP. While these plans have high deductibles, monthly premiums are typically much less than for plans with lower deductibles, which makes them appealing to people trying to minimize up-front costs associated with healthcare” (Folger, 2014). The company I work for used this strategy once to offset their health insurance costs. Although initially we received some pushback from the employees, eventually they got used to the plan, and they were happy to have the safety net of being able to transfer their leftover HSA balances to the following year, because opposite of a health savings account, a flexible spending account has a use it within the plan year or lose it policy. When implementing a high-deductible plan, you have to keep in mind the maximum employee out-of-pocket expenses allowed under the affordable care act. If managed appropriately, a high deductible plan might be a good way to offset