Thinking Outside the HDHP with Expense Reimbursed Insurance Plans

Executive Health October 17, 2023

It’s that time of year again: pumpkin-spice everything, scary costumes, fall color…and open enrollment just ahead. Employers must make final decisions about the benefit plans to offer talent next year. This is where expense reimbursed insurance plans come in.

Though HDHP/HSAs have more employer uptake than ever, it’s essential to be proactive about the shortfalls and downsides of these employee benefit plans. Doing so can help employers reduce employee financial strain and retain talent. In this article, we will look at how adding on truly innovative expense reimbursed insurance plans can help employers to close common gaps, keep talent happy and balance cost-coverage concerns.

Growth trends in HDHP/HSA enrollment

Over the last decade, employers have increasingly turned to high deductible health plans (HDHPs) to control benefit costs. According to research, HDHP enrollment has steadily grown: in 2012, about one-third of employees were enrolled in these plans, while by 2021, more than half (55.7%) were.1

These plans have proven attractive to employers because of the lower monthly premiums. Yet they create coverage gaps that can drive up out-of-pocket healthcare spending for employees, creating financial strain. Employers have sought to address these gaps by pairing HDHPs with health savings accounts (HSAs). The problem is that advisers and employers do not always consider the downsides of HSAs before implementing plans that include them.

Understanding the downsides of HSAs

Benefit changes that seem like good decisions can come with hidden costs—and this is certainly the case with HSAs. Because the HDHP/HSA combination can shift more healthcare costs to employees, employers should be aware of the downsides.

  • Timing. HSA funds must accumulate before they can be used, which can create timing issues. Consider that an employee facing an unexpected health event early in the year may not have sufficient funds in the HSA to pay for care. It is easy to see how such an event can quickly drive-up out-of-pocket healthcare spending.
  • Financial strain. Amid continued high inflation, employees are feeling the pinch. Over 90% report worries about inflationary pressures and rising costs.2
  • Stickiness. Even when they are funded by the employer, HSAs can be viewed as “dollars in, dollars out.” Employees use them for medical expenses but don’t necessarily perceive HSAs as valuable, just transactional. Another reason HSAs fall short in creating loyalty is because they’re portable so employees can take the account with them when they leave for another job opportunity.
  • Bottom-line connection. Benefits matter, and employees have options. Today, just 38% of employees are satisfied with their jobs and 35% do not trust their employers to make decisions in their best interests.3 Turnover can be costly to productivity and continuity, especially in a competitive hiring market.

Talent wants more guidance on employee benefit plans

Navigating employee benefit plans can be stressful for employees. In fact, research indicates that 72% of employees spend less than an hour reviewing and deciding on employee benefits plans.4 Employees may know they are not making the best decision on their benefits, and that these decisions come with far-reaching consequences on health and financial wellness. Without options or guidance, though, they face a disconnect.

Employers can step into this gap with targeted health benefit solutions that close voids in coverage, fit employee needs and deliver flexibility to manage health plan costs. Enter the expense reimbursed insurance plan.

The advantages of expense reimbursed insurance plans

Expense reimbursed insurance plans are layered on top of primary health insurance plans to offer additional coverage. These plans offer reimbursement for eligible healthcare expenses, which vary by plan. Unlike voluntary insurance plans, expense reimbursed insurance plans are not subject to disease or event limitations. They can:

  • Cover deductibles and close voids in coverage for everyday or routine care, like copays;
  • Cover unexpected expenses like x-rays, lab work or a hospital stay, and;
  • Provide (depending on the plan) valuable coverage for 213(d) flex-type expenses like LASIK, dental and vision, and brand-name Rx.

Expense reimbursed insurance plans are also a win for employers because they can:

  • Be carved out for specific employee classes, roles, or populations as determined by the employer;
  • Layer over the primary health insurance plan, or no plan at all;
  • Be put in place any month all year long, giving employers the flexibility to strengthen employee benefit plans as and when needed.

Open enrollment is almost here. Thinking outside the HDHP/HSA with expense reimbursed insurance plans can help advisers and employers offer benefits to keep employees happy, healthy and productive—while also managing health plan costs. This can help employers ensure that Halloween is the only scary thing this time of year—and not their employee benefits.

ArmadaCare’s supplemental healthcare insurance solutions are designed to enhance ordinary health benefits. We offer a wide range of targeted benefit plans that employers can provide to specific employee classes to help them with recruiting and retaining employees. Learn more about ArmadaCare’s plans, including how they helps to keep your talent healthy, productive and focused on the business.


1 Health Payer Intelligence, Value Penguin, 2023

2 MetLife, 2023

3 Alight, 2022

4 EBRI, 2022

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