Written by Marc Ashner, Vice President

Finding and maintaining cost-effective solutions is key in employee benefits management. It’s important to understand the pros and cons of different plans, such as a traditional Preferred Provider Organization (PPO) and Qualified High Deductible Health Plans (QHDHP) with a Health Savings Account (HSA). Every organization is different, and there is no one-size-fits-all approach. 

Traditional PPO plans offer familiar coverage but often come with higher premiums and limited flexibility, so employees may find themselves constrained by network restrictions and copay requirements. On the other hand, HSA-eligible plans offer tax advantages, flexibility, and control over healthcare spending. Employees can contribute pre-tax dollars, reducing taxable income while building a nest egg for future medical expenses.

At BSI, we’ve seen great success in optimizing both savings and employee well-being by transitioning clients from PPO to HSA-eligible plans, demonstrating a commitment to both financial prudence and employee well-being. Reduced premiums and employer contributions (compared to traditional PPO plans) can free up funds to invest in employees’ HSAs. Lower premiums, tax savings, and the ability to roll over unused funds year after year empower employees to make informed healthcare decisions, and employer contributions to employees’ HSAs further enhance financial wellness and incentivize participation.

Client Case Study: Private sector client with 50 employees

One of our clients historically experienced high renewals and frequent carrier changes prior to joining BSI CORE. Their main goal was to gain transparency and consistency in their healthcare costs while continuing to offer competitive benefits and stabilizing their year over year expense.

After a year in the model, BSI leveraged data available through BSI CORE to optimize the organization’s plan design. It had previously offered three plans: two PPOs and a Qualified high-deductible health plan (QHDHP), with one of the PPOs being the least expensive plan for the employees. 

Our recommended strategy was to reconfigure employee contributions while offering two HDHPs and one PPO. Employees who switched from the lowest cost PPO to the lowest cost HDHP received a 10% decrease from their previous year’s contributions. 

In addition, BSI worked with the employer to implement a wellness program where employees could earn HSA funding, and facilitated onsite education regarding HDHPs and HSAs to ensure the employees understood their benefits plan in order to make informed decisions.

Prior to the plan design optimization, 90% of employees were enrolled in PPOs. After the restructuring, 92% of employees enrolled in HDHPs. One year after the plan design optimization, over $50K in surplus was returned to the employer, and it was able to maintain competitive benefits for their employees.

The transition from a traditional PPO to an HSA-eligible plan offers a win-win scenario for employers and employees alike. By embracing the cost-saving potential and empowering employees to take control of their healthcare finances, organizations can foster a culture of financial well-being and security.

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