Introduction
High number of organization in the United states have adopted consumer-driven health care plan (CDHP) approach, to help them be able to manage and control their health care cost. They started shifting to CDHP after the plans that were being used there before failed to help them effectively manage this cost. The main objective for CDHP is to help organizations be able to maintain cost control on heath care matters. Additionally, the approach also gives the employees a variety of choices to make about health care, which they are supposed to make wisely (U.S Bureau of Labor Statistics, 2011). Different plans that the employees are supposed to choose from are differently packaged in order to suit different workers. One should choose the one that is more advantageous to them. However, there are also some disadvantages associated with these packages to both the employers and the workers.
Advantages and disadvantages of pursuing consumer driven health care options
Flexible spending account (FSA) is a pretax account used to offer high-deductable health insurance plan to the employees. The employees have a freedom to pay for health care costs that are specified and not covered by the insurance plan of their employers. The main advantage is that they are able to contribute to their FSA on pretax bases. The disadvantage associated with it is that long-term care, health, and life premiums that are paid by the employer or by reductions made on employees’ pretax salary cannot be reimbursed through health insurance plan. There are other costs that appear, such as cost purely cosmetic procedure, and the cash used to pay them cannot be used in treating a disease or defect (U.S Bureau of Labor Statistics, 2011). The money that was contributed for medication cannot be refunded if it was not used in duration of one year and therefore it is lost. Many people loses huge amount of their cash through this.
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Health reimbursement account (HRA) is an alternative accounts that allow the employees to get a refund of the unused contributed amount of money at the end of the year. This is advantageous to the employees since they are able to get back the money that they had contributed and they did not consume. However, only the employers can make these contributions for their employees. Health savings account (HSA) is an account that helps the workers pay for medical expense, either for them alone or for them and their dependent children depending on the package chosen. HSA being portable makes it very advantageous to the employees since they own the balance in the account when they terminate the employment relationship. These accounts are also subjected to funding limits that are inflation-adjusted. The workers also have an opportunity to receive treatment from hospitals or by doctors of their choice. They can also choose which type of medical services they want to purchase. The balances in the account that are not spent can also be rolled over to the following year and be left to accumulate without any tax being charged on it (U.S Bureau of Labor Statistics, 2011).
Should Classic Architects use FSA or HSA
Health Saving Account would best fit Classic Architects. Many advantages that employees enjoy would make them accept the new idea, of the organization changing their medical plan, with a lot of ease. It will also be less challenging for the organization to make this move than if they decide to use Flexible Spending Account. HSA will be more employees friendly and therefore the new change will not affect them negatively on their productivity.
References
U.S Bureau of Labor Statistics (2011) Employee Benefits in the United States , (BLS 11-1112). Accessed April 2012, www.bls.gov
U.S Bureau of Labor Statistics, (2011) National Compensation Survey: Employee Benefits in the United States, Bulletin No. 2771. Accessed April 2012, www.bls.gov
