Study: More Employers offer High Deductible Health Plans; HSA Contributions Double

The Kaiser Family Foundation and the Health Research & Educational Trust (Kaiser/HRET – http://ehbs.kff.org/) has published their annual survey of employer-sponsored health benefits. This year’s study found more employers offering high deductible health plans and that employer contributions to Health Savings Accounts doubled since 2007.

The study showed that thirteen percent of firms offering health benefits now offer a High Deductible Health Plan with an Health Reimbursement Arrangement (HDHP/HRA), a Health Saving Account (HSA)-qualified HDHP, or both in 2008. While the report notes that the increase does not represent a significant difference from the 10% reported in 2007, they do point out that there has been a statistically significant increase in the offer rate since the 7% reported in 2006.

As for the types of employers who have adopted HDHPs, the study found that firms with 1,000 or more workers are more likely to offer an HDHP/SO (saving option) than smaller firms. Twenty-two percent of firms with 1,000 or more workers offer an HDHP/SO compared to 13% of firms with 3 to 199 workers or 15% of firms with 200-999 workers.

The study also found that workers enrolled in HSA-qualified HDHPs on average receive an annual employer contribution to their HSA of $838 for single coverage and $1,522 for family coverage. These amounts are about double the amounts reported in 2007 ($428 for single coverage and $714 for family coverage), but this increase may be due in part to a change in legislation enacted by Congress in December 2006 that increased the maximum allowable annual HSA contribution. Although the increased amounts were allowed in 2007, due to the timing of the legislation, employers may not have had time to introduce higher contributions in 2007.  When those firms that do not contribute to the HSA are excluded from the calculation, the average employer contribution for covered workers is $1,139 for single coverage and $2,067 for family coverage.

Here are some other key findings related to HSA funding:

  • Small employers have significantly increased contributions: From 2007 to 2008, the amount contributed to HSAs for workers in small firms increased from $415 to $1,041 for single coverage and from $677 to $1,862 for family coverage. There was no statistically significant increase in HSA contributions for workers in large firms for either single or family coverage.
  • Not all employers are making contributions to employees’ accounts: In looking at employer contributions to HSAs, it is important to note that not all employers make contributions towards HSAs established by their employees. Twenty-eight percent of employers offering single or family coverage through HSA-qualified HDHPs do not make contributions towards the HSAs that their workers establish (covering 26% of covered workers enrolled in HSA-qualified HDHPs for single or family coverage).
  • But, the number not contributing is quickly decreasing: For single coverage, the percentage of firms that do not make a contribution to HSAs established by their employees decreased from 66% in 2007 to 28% in 2008. The report notes, however, that the 2008 percentage is similar to the percentage that was reported in 2006 (37%).

This year, the survey included questions for those employers offering HDHP/SOs on their opinions of the most successful outcome, biggest challenge, employee satisfaction, and primary reason for offering an HDHP/SO. Not surprisingly, forty-two percent of firms report that in their opinion, lower costs as the most successful outcome from offering a HDHP/SO.

Eighteen percent of firms reported helping employees engage in their health care as the primary reason for offering an HDHP/SO, with small firms (3-199 workers) being less likely (17%) than large firms (200 or more workers) (33%) to report this as their primary reason for doing so.

Health Plan Innovation Take: This report is more evidence that consumer-driven health care in the form of high deductible health plans associated with a tax-favored account has achieved significant acceptance among both large and small employers as a means of controlling the rise in health care costs. Both Presidential candidates have vowed to maintain the employer-based system of providing health insurance, So regardless of who moves into the White House in January, their health care strategy teams will need to figure out how to work these types of plans, including the accompanying HSAs and HRAs, into their overall health care schemes.

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