Healthcare and 401(k)

One person is making the case that health benefits should be designed for employees in a way that mimics fiduciary rules on retirement savings. (Photo: iStock)

Most of the public conversations about health care these days revolve around what to do about the Affordable Care Act.

Hillary Clinton wants to build upon it, including the addition of a “public option” insurance program that will compete with private insurers. Supporters of Bernie Sanders want it to be ultimately scrapped and replaced with a single-payer system. Donald Trump says he will repeal it and replace it with “something much better.”

One health care activist says that one simple federal rule change could bring greater benefits to the middle classes than any change to Obamacare.

David Chase, the founder of Avado, a patient relationship management software that was purchased in 2013 by WebMD, writes in a recent blog post that imposing the same fiduciary standards on health care benefits that already exist for retirement benefits could fundamentally change the U.S. economy and unleash prosperity on a battered American middle class.

Advisors overall are more optimistic about the Labor Department fiduciary rule, a Schwab study shows, though they think it will…

“Because there is zero ambiguity with retirement benefits that plan administrators are managing their employees’ funds, there is tremendous rigor and oversight around 401(k) fees and management processes,” he writes. “When fees are too high or relationships with service providers are too cozy, class action attorneys jump into action and employees’ interests are protected.”

While retirement benefits are treated unequivocally as the possession of the employee, writes Chase, health benefits, are treated as the employer’s money. As a result, health plans are rarely designed specifically for an employee, who is subject to whatever plan the employer chooses.

The case for treating health benefits as the employee’s money becomes clearer, he argues, as employers increasingly move towards high-deductible health plans and others that shift a greater share of the cost of care onto their employees.

In another recent blog post, Chase suggests that U.S. Labor Secretary Tom Perez, who was known to be a strong contender to be Hillary Clinton’s running mate, could make his biggest mark on the U.S. economy and health care system by making that one rule change.

“Perez began his tenure by holding several meetings to finally implement rules for the fiduciary standard. Perhaps one of this final moves will be to ensure the fiduciary standard extends to all areas of ERISA.”






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