More Large Employers Broaden Health Plan Mix

The percentage of large employers offering both high-deductible and traditional health plans rose by 9 percent to 65 percent in the 2018 plan year, a sign that benefit choices matter, a new survey found.

When offered at least one high-deductible health plan (HDHP) and one traditional plan, 48 percent of employees chose a PPO plan, 35 percent chose an HDHP, 7 percent preferred an HMO, 6 percent went with another traditional medical plan and 4 percent declined to enroll, the survey found.

HDHPs have made the greatest inroads with large companies over the last few years as employers seek to hold down medical costs. Seventy percent of large employers include HDHP plan types in their benefits package, the survey found.

“What typically happens is the employer rolls out a single HDHP to get interest from and educate the employees, then over the years multiple HDHPs roll out with different deductibles,” said Jeff Oldham, senior vice president of Global and Institutional Markets for Benefitfocus.

HDHPs, as their name suggests, come with high deductibles in exchange for lower premiums.

High-deductible models appeal to younger and healthier employees willing to shoulder more risk due to their comparatively low chances of falling ill, and companies find that offering HDHPs helps attract and retain workers.

Benefitfocus, a cloud-based employee benefits management platform, publishes the survey annually.

The State of Employee Benefits 2018 was compiled from anonymous enrollment transactions across 544 large employers, each with more than 1,000 employees, representing about 1.3 million individuals in all.

HSA Participation Soars

To help employees pay for higher out-of-pocket costs that come with higher deductibles, employees who select high-deductible plans are eligible to put money away into health savings accounts (HSA) or flexible spending accounts.

Participation in HSAs among eligible HDHP subscribers soared to 81 percent among all employees in the 2018 plan year from only 50 percent last year, the survey found.

HSA participation rose among all age groups, a sign that employees and brokers who help companies implement benefits programs have grasped the value of enrolling in a high-deductible plan and funding it through tax-advantaged savings accounts.

“That tells me they are using (HDHP) plans and understand tax advantages of HSAs,” Oldham said.

HSAs are to high-deductible health plans what 401(k)s are to retirement, analysts say. But as with 401(k)s, many employees aren’t contributing as much as they are allowed into their HSAs.

Average annual employee and employer contributions for single coverage amount came to $1,997, or $1,453 short of the $3550 single employee contribution limit for 2018.

Average annual employee and employer contributions for family coverage came to $4,007, or $2,893 short of the short of the $6,900 family contribution limit for 2018, the survey found.

“When it comes to HSA contributions, there remains room for growth,” the survey said.

Premiums Rise Slightly

While the employee-paid portion for premiums into HDHPs are, on average, lower than the employee-paid portion for premiums into PPOs, premiums for both plan types rose slightly in 2018 compared to 2017, the survey found.

Single-coverage plans saw employee premium contributions rise 4 percent for HDHPs and 5 percent for PPOs over 2017.

InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].

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Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at [email protected].