Most U.S. Employers with Consumer-Driven Plans Prefer HSAs

New study looks at motivations for adopting or avoiding plans, and employer contributions

By Stephen Miller Nov 20, 2009

Among U.S. employers that offer an account-based health plan, health savings accounts (HSAs) continue to be the preferred funding choice, further eclipsing health reimbursement arrangements (HRAs) in 2009. This finding is among several trends highlighted in a new survey by Aon Consulting and the International Society of Certified Employee Benefit Specialists (ISCEBS), an association of employee benefits and compensation professionals.

An HSA is owned by the employee and funded by the employee or with contributions from the employer. An HRA is owned and funded by the employer.

In 2009, 44 percent of U.S. employers offered their employees an HRA or HSA, together known as consumer-driven health (CDH) plans and characterized by monetary incentives to restrain unnecessary health care spending. This figure is significantly higher than in 2006, when only 28 percent of U.S. employers offered a CDH plan to their workforce.

Of those offering CDH plans in 2009, 56 percent used the HSA model, 35 percent used the health reimbursement arrangements (HRA) model, and 9 percent used both. Over the previous three years, the gap had widened between HSAs and HRAs, as the number of employers offering HSAs rose from 48 percent to 56 percent, and the number offering HRAs dropped from 43 percent to 35 percent.

HSAs Outpacing HRAs
Among U.S. employers providing a consumer-driven plan, below is a breakdown of the percentage offering health savings accounts (HSAs) vs. health reimbursement arrangements (HRAs).
















Source: AON Corp. and ISCEBS.

“HSAs have grown in popularity relative to HRAs, since HSAs are considered more advantageous to the employee than HRAs,” says John Zern, U.S. health and benefits practice director with Aon Consulting. “With an HSA, employees can contribute their own money. The account is owned by the employee and is portable at termination of employment. HSAs also have great tax advantages.”

Optional Plan or Sole Choice?

The survey found the majority of U.S. employers (83 percent) that provide a CDH plan to their employees offer an HSA or HRA as an option along with traditional health plans, such as preferred-provider organization (PPO) and health maintenance organization (HMO) plans. The remaining 17 percent have implemented a total replacement CDH program where the only plan choices offered to employees are CDH plans.

“Although only 17 percent of employers offer a total replacement CDH program, we expect that number to increase” in 2010, says Bill Sharon, national consumer-driven health care practice leader with Aon Consulting. “In response to the economic downturn and double-digit health care cost increases, employers are becoming more aggressive in managing their health care costs. Implementing a total replacement CDH program is one of the leading health care strategies available to employers.”

Employer Contributions

Additionally, the survey found that more employers who offer an HSA plan are contributing money to the plan (66 percent in 2009 vs. 60 percent in 2008). Among these employers, contributions to the accounts of individual employees in 2009 included:

A flat dollar amount of less than $500 per person (15 percent).

A flat dollar amount of $500 or more (45 percent).

A matching employer contribution (6 percent).

Employers offering an HRA plan made a wide variety of contributions to the accounts of individual employees, including:

Less than $300 (4 percent).

From $300 to $499 (11 percent).

From $500 to $799 (49 percent).

From $800 to $999 (1 percent).

$1,000 or more (34 percent).

Motivations for Providing a CDH Plan

Employers offering a CDH plan in 2009 said that they were doing so mainly to:

Control health plan costs (38 percent).

Introduce “consumer engagement” into the purchasing of health care for long-term change (35 percent).

Expand employee choices (14 percent).

Encourage better use of health care services (9 percent).

Provide a vehicle for retiree medical savings (3 percent).

Growing Employee Participation

Regarding employee enrollment in CDH plans, the 2009 survey found that 63 percent of employers had more than 10 percent of their employees participating in a CDH plan. In 2006, 53 percent of employers had more than 10 percent or more participating in a CDH plan.

Employers believe that the reasons employees choose not to enroll in an available CDH plan is because they:

Are concerned about high out-of-pocket costs (51 percent).

Prefer a traditional plan design (20 percent).

Lack knowledge about CDH plans (10 percent).

Perceive CDH plans as too complex (5 percent).

“In our 2006 study, 66 percent of employers believed their employees did not enroll in the plan because they feared out-of-pocket expenses associated with high deductibles, and while this perception is lower this year, there is still room for improvement,” Sharon says. “Employers who have higher enrollment have designed their CDH plan to have similar out-of-pocket maximums and deductibles as traditional health plans such as an HMO and PPO.”

​Deductible Levels
HSAs must be linked to high-deductible insurance plans (in 2009 that meant an annual deductible of at least $1,150 for individual coverage). HRAs have no such requirement. Overall, the levels of deductibles for individual coverage in consumer-driven health plans were as follows in 2009:

Less than $1,000


From $1,000 to $1,499


From $1,500 to $1,999


From $2,000 to $2,499


$2,500 or more


Source: AON Corp. and ISCEBS.

For Some Employers, Concerns Remain

While 56 percent of U.S. employers surveyed were not offering a CDH plan, 37 percent say they plan to offer one in the near future. Of this group:

6 percent planned to offer a CDH plan by the end of 2010.

31 percent were undecided on an effective date.

62 percent were not seriously considering a CDH plan as a future plan offering.

Employers gave a variety of reasons for not considering a CDH plan seriously, indicating that they:

Are satisfied with their traditional plan designs (27 percent).

Don't believe that enough employees will enroll in the CDH plan to make it worth offering (23 percent).

Don't want to expose employees to potentially high claim costs (13 percent).

Fear that the CDH plan will siphon off healthy employees from their traditional plans, hurting overall plan costs (12 percent).

Think that the CDH concept is too new and will wait to see other employers’ experiences before deciding to offer one (11 percent).

Overall,25 percent of respondents worry that CDH plans could lead employees to forego needed health care to save money, and 5 percent believe that the plans have no effect on employee health care purchasing.

Positive Perceptions Increase

The majority of respondents, however, continue to be optimistic about the effectiveness of CDH plans, as 57 percent believe that they make employees more efficient consumers of health care. And employer opinions on the future of the CDH concept have grown more positive:

In 2009, 45 percent of employers believed that CDH plans would be successful in controlling employers’ health care costs in five years, vs. 39 percent of employers in 2006.

26 percent did not believe that they will be successful, down from 30 percent in 2006.

29 percent did not know the impact CDH plans will have on health care costs, down from 31 percent who held that perception in 2006.

“The outcome of national health reform could influence the future of CDH plans,” says Tom Lerche, U.S. health care practice leader with Aon Consulting. “In particular, the proposed minimum plan design requirements could impact CDH plans offered through the proposed insurance exchanges and could, over time, impact CDH plans offered outside the exchanges.

“Unless constrained by national health reform, we do expect CDH plans to continue to grow in popularity, as they have proven to be an effective strategy for lowering health care cost increases by creating informed and knowledgeable consumers who effectively manage their health risks,” he concludes.

Stephen Miller is an online editor/manager for SHRM.

Related Articles:

Employer Contributions Shifting in Consumer-Driven Health Plans, SHRM Online Benefits Discipline, November 2009

Reform Not Expected to Slow Shift to Consumer-Directed Health, SHRM Online Benefits Discipline, October 2009

Forecast: Health Care Costs Over $10,000 per Employee Plus One, SHRM Online Benefits Discipline, October 2009

Improved Cost Control with HSAs, Surveys Show, SHRM Online Benefits Discipline, September 2009

Rebalancing Health Costs, HR Magazine, September 2009

CDHPs Increasingly Favored Over HMOs, HR News, August 2009

IRS Announces 2010 Minimums and Maximums for HSAs and High-Deductible Health Plans, SHRM Online Benefits Discipline, May 2009

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