“CDHP’s” from ERS – a bad deal for state workers, retirees

During the 2015 Legislative Session, House Bill 966 was passed into law requiring the Employees Retirement System (ERS) to offer Consumer Directed Health Care Plans (CDHP) as an option for state employees. CHDP’s are high-deductible health care plans that are tied to a Health Savings Account (HSA). Last month, the ERS Board of Trustees approved the plan structure for the new CDHP. TSEU had actively opposed CDHP’s and HSA’s in every legislative session since 2003.

The CDHP will be available to employees and retirees who aren’t eligible for Medicare. State employees are NOT required to switch from their current HealthSelect plan to the CDHP. During the upcoming Summer Enrollment period, employees will have the option to select the new CDHP with coverage beginning September 1, 2016.

TSEU strongly recommends that state and university employees who receive their health benefits from the ERS do NOT opt-in to the CDHP.

Why are Consumer Directed Health Plans (CDHP) a bad deal?

  A CDHP is an alternative health care plan with very high deductibles and out of pocket maximums. CDHP’s shift more of the cost of health care on to employees with the goal of forcing us to make less expensive decisions about care for ourselves and our dependents. The reality is that the high deductibles and out-of-pocket expenses associated with CDHP’s makes critical health care services far too expensive for many employees. The in-network deductible for the CHDP will be $2,100/individual and $4,200/family. The out-of-network deductible will be $4,200/individual and $8,400/family. Preventive care services are not subject to the deductible, but prescription medications are.
The CDHP will be paired with a Health Savings Account, which is a separate fund used to help cover the costs of this new health plan. The State will contribute $45 per month ($540 per year) for member only coverage and $90 per month ($1,080 per year) for family coverage in the employee’s HSA. This amount is not nearly enough to cover the costs of high deductibles and other expenses related to the CDHP. Even with the HSA contributions from the state, employees will be on the hook for at least 75% of the health care costs within a CDHP.

More reasons the CDHP is a bad deal

  • Under the CDHP offered by ERS, state employees could pay an additional yearly cost of $1,560 for individual coverage and $2,695.92 for dependents to access non-preventative health care services.
  • The modest state contribution into the HSA will do little to offset the costs of high deductibles and other expenses in the CDHP.
  • The high deductibles in CDHP’s place more financial burden on those who have a higher need for health care services, such as the elderly, women, employees with families and the chronically ill. This discourages employees within those groups from seeking necessary health care services.
  • Younger and healthier employees who opt into the CDHP will be burdened by high health care costs in the event of unexpected health care problems, accidents, or the natural results of aging.

More details about the CDHP

  • Employees will be responsible for 100% of health care costs until we have paid the deductibles.
  • After the deductible has been paid, the CDHP will pay out benefits at 80% in-network and 60% out-of-network until the out-of-pocket maximum is reached. The in-network out-of-pocket maximum will be $6,550 for individuals and $13,100 for families. The out-of-network out-of-pocket maximum will be $13,100 for individuals and $26,200 for families.
  • Both the CDHP and HSA will be administered by United Healthcare, the same company that administers the current HealthSelect plan.
  • Employees may contribute additional funds to their HSAs but it must be within the employer + employee contribution limits of $3,350 for individuals and $6,750 for families. These amounts are annually set and adjusted by the IRS.
  • Employees in a CDHP will retain the money in the HSA if he or she leaves the state workforce.
  • Like the current HealthSelect plan, the State will cover 100% of the cost of an active employee’s premium and 50% of the dependent premium. The dependent premium cost for the CDHP will be 10% less compared to the HealthSelect Plan.
  • The CDHP will be structured as a network PPO. But unlike the current HealthSelect, the CDPH does not require a primary care physician’s (PCP) referral to see a specialist.
  • CDHP participants will not be eligible to participate in the TexFlex Health Care Flexible Savings Account (FSA) program.

These changes to our health care are not always clear or easy to understand. If you have any questions, do not hesitate to contact HARRISON HINER or SETH HUTCHINSON in the Austin TSEU office at: 512.448-4225.