Health Savings Accounts Offered Through Employer Consumer Driven Health Plans Are On the Rise

Dec

Health Savings Accounts Offered Through Employer Consumer Driven Health Plans Are On the Rise

Tagged Under : Driven Health, Driven Health Plans, Health Plans, Plans

According to a new survey by Aon Consulting and the International Society of Certified Employee Benefit Specialists, more employers are offering Consumer Driven Health Plans (CDHPs) with Health Savings Accounts than ever before. Consumer Driven Health Plans have been available since 2000 and are popular health insurance options for employers who want to help their employees have more control over their healthcare expenses than is allowed by traditional insurance plans.

Of the 370 organizations who participated in the survey, 44% of currently offer Consumer Driven Health Plans to their employees. Comparatively, only 28% of respondents to a similar 2006 survey offered Consumer Driven Health Plans. Also, 63% of employers have more than 10% of their employees participating in a CDHP – a percentage that is similar to last year’s survey results, but higher than three years ago when 53% of employers had more 10% of employees enrolled in a CDHP.

With a Consumer Driven Health Plan, employers offer a high deductible HSA insurance plan that is either coupled with an employer-sponsored tax-deductible Health Savings Account, Health Reimbursement Arrangement, or both. Of the 44% of respondents currently offering Consumer Driven Health Plans, 56% are offering Health Savings Accounts, 35% are offering Health Reimbursement Arrangements model, and 9% are offering both the Health Savings Account and the Health Reimbursement Arrangement with the high deductible insurance.

Health Savings Accounts are becoming increasingly popular amongst both employers and employees across the country. Since 2006, Health Savings Account participation has increased from 48% to 56%. Health Reimbursement Arrangements, on the other hand, are becoming increasingly less popular; in the past year, Health Reimbursement Arrangement participation has fallen from 43% to 35%, according to the Aon Consulting joint survey.

“HSAs have grown in popularity relative to HRAs since HSAs are considered more advantageous to the employee than an HRA,” said John Zern, U.S. health and benefits practice director for Aon Consulting. Zern noted that Health Savings Accounts tend to appeal to a greater number of employees because of the increased control employees have with them; employees not only contribute their own money to their Health Savings Accounts so they own their plans, but they can take their plans with them when they change jobs. Moreover, Health Savings Accounts offer many tax advantages, he said.
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“Although only 17% of employers offer a total replacement CDH program, we expect that number to increase next year,” said 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.”

According to the Aon Consulting survey, a startling 83% of employers offer optional Health Savings Accounts or Health Reimbursement Arrangements to their employees. The 17% of employers who do not offer these plans have implemented a total replacement CDH program CDHPs are the only plans available for employees.

Many employees who participate in Health Savings Account and Health Reimbursement Arrangement plans also receive contributions from their employers. 66% of survey participants contribute money to their employee’s Health Savings Account plans – up from 60% last year alone. Employers offering Health Reimbursement Arrangements say they plan make contributions to their accounts; 4% will contribute less than $300; 11% will contribute $300 to $499; 49% will provide contribute $500 to $799; 1% will contribute between $800 to $999; and 34% will contribute $1,000 or more.

Amongst employers who offer a CDHP, their reasons for offering the healthcare solutions have not changed much since last year; 38% offer CDHP plans to help control health-plan costs, 35% are attempting to introduce their employees to “consumer engagement” that will help them purchase the right healthcare solutions for their long-term needs, 14% have introduced CDHP to expand employee choices, 9% are trying to encourage better use of health care services, and 3% are helping their employees to have a vehicle for medical expenses they may face in retirement.

Of the 56% of survey participants who are not currently offering a CDHP to their employees, 37% say they plan to offer one. Of the employers who plan to offer a CDHP, 6% plan to offer one this year or next; 31% are undecided as to when they will offer one, and 62% say they are not seriously considering offering a CDHP.

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