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Over one-third of employees at midsize firms select a high-deductible health plan
Traditional health plans—primarily preferred provider organizations (PPOs)—still dominate the plan mix at midsize U.S. employers, with 87 percent such employers offering the plans this year. Only 13 percent of midsize employers offer at least one high-deductible health plan (HDHP) option; HDHPs typically have lower premiums than traditional plans, creating an incentive to avoid overuse (or, sometimes, necessary use) of health care services. But when given the choice, over one-third (34 percent) of employees at midsize firms select an HDHP, with Millennials over age 26 the most likely to opt for an HDHP (40 percent).
Those are among the findings from a new
report on health benefits at midsize employers by Charleston, S.C.-based Benefitfocus, a benefits management software company. The data was culled from the firm’s national client data warehouse, with over 500,000 anonymous individual health records submitted during the fall 2015 open enrollment period for approximately 2,400 midsize employers with 100 to 999 full-time employees.
The new report is a follow-up to the firm’s inaugural study, released earlier this year, analyzing health plan
data from large employers.
In 2016, total premiums across all health plans at midsize employers averaged $14,885 for family coverage and $6,016 for self-only coverage. Not surprisingly, total premiums were higher for traditional plans, including health maintenance organizations (HMOs) and PPOs, than for HDHPs.
2016 Average Health Plan Premiums at Midsize Employers
While deductibles for HDHPs at midsize employers were higher than their traditional-plan counterparts, deductibles for PPOs in 2016 were by no means low. (The report did not break out HMO deductibles.)
“PPO deductible averages for midsize employer plans actually exceed the minimum-deductible levels for HDHPs designated by the IRS,” which for 2016 are $1,300 for self-only coverage and $2,600 for family coverage, said Logan Butler, a benefits content specialist at Benefitfocus..
“We found that high-deductible health plans lived up to their name,” he noted. But, increasingly, “PPOs may now just be a lighter form of HDHPs.”
2016 Average Health Plan Deductibles at Midsize Employers
Health Care Consumerism
When co-pays and co-insurance are considered along with deductibles, employees are financially responsible for much more of their health care costs. Across HDHPs and PPOs, the average out-of-pocket maximum ranges from 1.8 to 2.7 times the plan’s corresponding deductible amount, “adding thousands more health care dollars that employees must cover themselves,” the report states.
“To put that in perspective, the average family could spend nearly 40 percent more on health care in 2016 than for food,” based on U.S. Bureau of Labor Statistics figures, assuming a 2.5-person average household size for family coverage, the report said.
To help cover out-of-pocket costs, many employers provide access to health savings accounts (HSAs), which must be paired with an HDHP, or flexible spending accounts (FSAs), which can be paired with any health plan.
All dollars held in an HSA—the cap for 2016 is $3,350/individual coverage or $6,750/family coverage—unlike dollars contributed to FSAs, can roll over year after year, and HSAs are employee-owned and portable when employees leave their jobs. (With an FSA, $500 or less can be moved to the following year on top of the
allowed annual contribution, which in 2016 is $2,550.)
However, employees at midsize firms with HSAs are typically unable to—or choose not to—fully fund their HSAs, with eligible employees contributing, on average, less than half the maximum amount allowed.
2016 Average HSA Contributions at Midsize Employers
Gap Between Contributions and 2016 Limit
$2,704 (limit: $6,750)
“The report shows HDHPs are being well received, signaling a desire from employees to select plans that fit their lifestyles,” said Shawn Jenkins, Benefitfocus CEO. “To attract and retain talent, we’ll undoubtedly see employers drive more choice and innovation in the type of benefits they’re offering, and the process for plan selection. As this shift toward consumer-driven health plans continues, employers must make decision support, education and financial wellness a top priority to help in the transition.”
Increased Cost Burdens
That sentiment was echoed in a separate
survey report from TransUnion Healthcare, a provider of consumer data and analytics.
The survey of 1,500 consumers with health coverage through the Affordable Care Act marketplace, Medicare/Medicaid, or employer-provided coverage at work found that nearly 2 in 3 (64.4 percent) said they were more concerned this year about the total cost of their health care services than they were last year.
“Consumers are feeling an increased burden from the rising costs for their health care premiums, co-pays and deductibles and are paying closer attention to their total cost responsibility,” said Gerry McCarthy, Denver-based president of TransUnion Healthcare.
More than half (57.9 percent) of the consumers surveyed said the rising costs of health insurance have already added a financial strain to their budget or their family’s budget. Seven in 10 said if they received estimated costs before a procedure, it would help them better anticipate costs and budget for payments. Additionally, nearly 3 in 5 said they would be more willing to return to a hospital or health care provider for future services if they were given billing estimates at the point of service or during registration.
“Payment estimations can help patients budget, anticipate costs, and ultimately pay their bills on time or in full,” McCarthy said.
Stephen Miller, CEBS, is an online editor/manager for SHRM.
Follow me on Twitter.
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