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Health Savings Accounts: The Future of Health Care for Law Firms Is Amended; Becomes Stronger, Smarter, and Broader Reaching

Consider this concept: we’ve always done things one way.  Is there any reason that we should believe there isn’t a better way?  Of course not.  The U.S. constitution has even had to be amended, when it was discovered that positive changes needed to be made.  As a country, we not only adapted the amendments, but we became grateful for them, wondering how we ever survived prior to their passing.  In a similar way, the same open minded philosophy should be given consideration when it comes to health insurance.  Health care coverage has evolved over time to meet the changing needs and demands of our nation’s residents. From paying for medical treatment and procedures out of pocket, to HMOs to PPOs, health insurance policies have been forced to evolve, lest they go the way of the dinosaurs.

Likewise, as a law firm partner, or owner or manager of a legal vendor company, just because you’ve always provided your employees with a particular form of health benefits does not mean that there isn’t a better, more forward-thinking way. However, reluctance to change is understandable.  As we all know, the constitution has been amended less than 30 times in more than 200 years.  Ten of those were our own Bill of Rights, which we take as given rights even though they didn’t appear in the original Constitution. But, when the change was for the better, we all signed up.  So why wouldn’t we do the same for the benefit of our firms, practices or companies, particularly if the changes will result in saving money, while continuing to provide and even improve upon health coverage for our associates or employees. It’s simply narrow-minded to refuse to consider the change.

The latest and most pragmatic opportunity for law firms and legal vendors to save money while still providing the same quality of benefits to employees & associates has emerged in the form of Consumer Driven Health Plans (CDHPs).  Of these policies, the most innovative is the emergence of Health Savings Accounts (HSAs).

HSAs are attractive to managing partners, HR departments, and office managers for three key reasons. The first is evident in the fact that offering employees or associates an HSA will almost certainly save the firm money. That’s a direct benefit to the firm as a whole.  By offering your staff an HSA, as employers, you are opting for a high-deductible policy, which always drives down the premium on the policy.

Before assuming that changing to a high deductible health plan is a slap in the face to your valuable associates and staff, consider the following example.  A firm was offering a rich PPO plan, at the rich price of $30K per month.  This plan gave employees a $500 deductible, and required them to pay $30 out-of-pocket for office visit.  When switching to the HSA plan, employees now faced a $2500 deductible, but then all Well Care visits were covered at 100%.

As a result of this change, the firm now paid only $18K/month. However, in order to show their employees that this by no means disregarded their their health and wellbeing, the firm invested those savings into $2500 Health Savings Accounts for each employee.  The verdict?  The firm reduced its monthly premiums to $25K.  Employees, for their part, reaped 100% employer-paid and 100% covered health plan from their company.  The firm still saved 20% on health care costs each month.  Suffice to say, both parties felt victorious. (Of course, not all firms will apply their savings towards HSAs, but those who do; those who do so retain quality employees by being mindful of employee morale and satisfaction).

A second attraction to HSAs for law firms and vendors lies in the fact that all employees using this type of CDHP automatically receive the Wellness Benefit, at 100%. Indeed, that means that even those associates who aren’t prone to go for a yearly physical may be more inclined to do so when it’s free. Research has clearly shown that preventative medicine such as yearly physicals covered by the Wellness Benefit are influential in reducing employees’ out of pocket future health care costs.

The third attractive benefit stems from its broader appeal.   In short, the more businesses that transfer to this kind of plan, the greater the nation’s overall health care savings.  This is because CDHP products such as HSAs increase in price at a lower rate than traditional PPOs because they shift control to the consumer. But they also come with a higher deductible.  In the insurance world, the higher the deductible, the lower the premium. As a beneficial by-product, the less you’re paying in health insurance premiums, the more money you’ll have to invest in additional associates or support staff, a second location for your firm, high tech upgrades to your firm practices  and so on.  All of these can certainly help our nation’s overall economic health.

Lastly, consider that the money that goes into an HSA is a tax deduction for the employer or firm, as well as the employee or associate. That is, in terms of tax deductions, there is no difference between a CDHP compared to a PPO. So, if you’re willing to consider that sometimes your firm’s practices need amending, and you are also open to saving money, it is clearly worth the time to meet with your insurance agent to discuss options for your firm.

Steven Driss

Steven Driss is President of Lifeline Employee Benefits in Tarzana, CA. Lifeline Employee Benefits was established in 1985 to help individuals and small businesses identify and purchase affordable health insurance, disability and group insurance. For additional information visit www.health-quotes.net or contact Steven directly at (818) 774-1003 or via email at steve@health-quotes.net

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About the Author: Steven Driss is President of Lifeline Employee Benefits in Tarzana, CA. Lifeline Employee Benefits was established in 1985 to help individuals and small businesses identify and purchase affordable health insurance, disability and group insurance. For additional information visit www.health-quotes.net or contact Steven directly at (818) 774-1003 or via email at steve@health-quotes.net

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