Post­ed by: Bill Olson

Unit­ed Ben­e­fit Advi­sors Health Plan Sur­vey Finds High­er HSA Con­tri­bu­tions Cor­re­lates to Increased Enroll­ment in High Deductible Health Plans

In 2014, employ­ees saw a 10 per­cent decrease in their aver­age sin­gle Health Sav­ings Account (HSA) employ­er con­tri­bu­tion from the pre­vi­ous year, from $574 in 2013 to $515 in 2014, accord­ing to new data released from the 2014 Health Plan Sur­vey of Unit­ed Ben­e­fit Advi­sors, the largest health ben­e­fits sur­vey in the nation. Aver­age fam­i­ly con­tri­bu­tions also decreased 7 per­cent dur­ing the same peri­od, from $958 to $890. Sur­vey results reveal a cor­re­la­tion between enroll­ment in HSAs and Con­sumer Dri­ven Health Plans (CDH­Ps), link­ing high­er HSA con­tri­bu­tions to increased enroll­ment in the cost-sav­ing plans.

“Employ­er HSA fund­ing strate­gies have changed in recent years in response to the Patient Pro­tec­tion and Afford­able Care Act (PPACA) and its impact on employ­er-spon­sored health insur­ance plans,” says Bri­an M. Goff, Pres­i­dent & CEO of Insur­ance Solu­tions, a UBA Part­ner Firm. “When HSA prod­ucts were new, the employ­er could take the pre­mi­um sav­ings and ful­ly fund the deductible. Now, how­ev­er, pre­mi­um reduc­tions are not as great as they once were. As pre­mi­ums increase, employ­ers nat­u­ral­ly opt to put their con­tri­bu­tions toward pre­mi­ums first and will slow­ly reduce their HSA fund­ing to the point where, in some cas­es, it becomes entire­ly the employee’s respon­si­bil­i­ty,” says Goff.

There are many addi­tion­al fac­tors that will impact an employer’s HSA con­tri­bu­tion strat­e­gy, says Mark Sher­man, Prin­ci­pal of LHD Ben­e­fit Advi­sors, anoth­er UBA Part­ner Firm. Sher­man says such fac­tors include the deductible amount, the employ­ee pre­mi­um con­tri­bu­tion, the out-of-pock­et max­i­mum, and whether there are oth­er types of plans offered.

“At the end of the day, employ­ers typ­i­cal­ly have a bud­get that they work with­in,” advis­es UBA Part­ner, Andrea Kinkade, President/Benefit Advi­sor at Kamin­sky & Asso­ciates, Inc. “Either employ­ee pay­roll deduc­tions (pre­mi­ums) increase or employ­er HSA con­tri­bu­tions decrease to keep ben­e­fit costs with­in the budget.”

HSA ACTIVITY BY EMPLOYER SIZE

Small­er employ­ers (1 to 50) are exceed­ing the aver­age HSA con­tri­bu­tion for sin­gles, while larg­er employ­ers (50 to 1,000+) have been less gen­er­ous, accord­ing to the sur­vey. Even larg­er employ­ers (1,000+), in fact, show the low­est aver­age con­tri­bu­tion at $426. Sim­i­lar­ly, for fam­i­lies, HSA con­tri­bu­tions by small­er employ­ers tend to be above the aver­age $890 con­tri­bu­tion, while large employ­ers (1,000+) fund an aver­age of $760.

“There are a few rea­sons for this,” says Goff, “The larg­er the group, the more imper­son­al some of these deci­sions are. Plus, many large groups are self-fund­ed where pre­mi­um equiv­a­lents between HSA plans, health main­te­nance orga­ni­za­tions (HMOs) or pre­ferred provider orga­ni­za­tions (PPOs) are not as great. As a result, the expec­ta­tion is that the employ­er con­tri­bu­tion to the HSA will not be as great and some employ­ees will enroll in non-HSA plans — mak­ing the high-deductible plan not as worthwhile.”

Find­ings show large employ­ers also have low­er CDHP enroll­ment. Even though 25.5 per­cent of large employ­er plans are CDH­Ps, only 16.6 per­cent of their employ­ees are enrolled in them.

“Gen­er­ous HSA con­tri­bu­tions among small groups are typ­i­cal­ly designed to help com­pen­sate for high­er deductibles than those that are offered in larg­er group plans,” says Kinkade.

REGIONAL HSA ACTIVITY

The cor­re­la­tion between high HSA con­tri­bu­tions and high enroll­ment in high-deductible health plans (HDH­Ps) is con­sis­tent across dif­fer­ent indus­tries and regions, with the excep­tion of Cal­i­for­nia, which has the most gen­er­ous HSA con­tri­bu­tions ($808 for sin­gles and $1,316 for fam­i­lies) yet the low­est enroll­ment in CDH­Ps: only 11.3 per­cent of plans in Cal­i­for­nia are CDHP plans and only 8.1 per­cent of employ­ees are enrolled in them.

“Mar­ket dom­i­nance of Kaiser and a strong HMO pref­er­ence in Cal­i­for­nia off­sets the rate relief offered by CDH­Ps, mak­ing the high deductible not worth­while,” says Goff.

“In the Mid­west, we still see some employ­ers con­tin­u­ing to offer high­er HSA con­tri­bu­tions or low­er pre­mi­um con­tri­bu­tions as a way to entice employ­ees to these cost-sav­ing plans,” says Kinkade.

New Eng­land, which typ­i­cal­ly has the most gen­er­ous health care pack­ages over­all, sees aver­age HSA con­tri­bu­tions of $685 for sin­gles and $1,342 for fam­i­lies. South Cen­tral states have the low­est con­tri­bu­tions: $360 for sin­gles and $554 for fam­i­lies. Near­ly 36 per­cent of North Cen­tral states offer CDHP plans (the high­est of any region) and more than 40 per­cent of employ­ees in this region are enrolled in such plans (also the high­est in the nation).

“Since the North Cen­tral region is large­ly com­prised of Anthem BCBS states, car­ri­er moti­va­tions play into these stats,” says Sher­man. “Specif­i­cal­ly, low region­al inter­est in HMOs and Anthem BCBS’ pur­chase of Lumenos, a CDHP mar­ket­ing spe­cial­ist, made it easy for employ­ers to move from a PPO to a CDHP.”

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HSA ACTIVITY BY INDUSTRY

In look­ing at the sur­vey data by indus­try, con­struc­tion, health care/social assis­tance, mining/oil and gas extrac­tion, retail and whole­sale pro­vide the low­est HSA con­tri­bu­tions for sin­gles and fam­i­lies. Con­verse­ly, gov­ern­ment employ­ees have the most gen­er­ous HSA con­tri­bu­tions ($791 for sin­gles and $1,431 for families).

“Con­struc­tion com­pa­nies typ­i­cal­ly hire young men who demo­graph­i­cal­ly don’t place a lot of val­ue in ben­e­fits. Gov­ern­ment, on the oth­er hand, has tra­di­tion­al­ly sub­sti­tut­ed salary for ben­e­fits; one way to move those employ­ees off an expen­sive plan is to ful­ly fund their deductible,” says Goff. “But car­ri­er moti­va­tions can also be at play. Some car­ri­ers give a cer­tain pre­mi­um dis­count to go to the high deductible plan. So if you have a low pre­mi­um, i.e., con­struc­tion because of a young male demo­graph­ic, the pre­mi­um may only come down $800 a year to add a $1,500 deductible. On the oth­er hand, take a nurs­ing home that has expen­sive pre­mi­ums, the sav­ings may be $1,700 to add a $1,500 deductible, mak­ing it a no-brain­er to switch to an HSA plan.”

The strat­e­gy of attract­ing employ­ees to CDHP plans with gen­er­ous HSA con­tri­bu­tions has worked in the finance and insur­ance indus­try, as well, where 32.3 per­cent of plans are CDH­Ps (the high­est of any indus­try) and enroll­ment is 32.1 per­cent (also the high­est enroll­ment of any indus­try). HSA con­tri­bu­tions in the finance and insur­ance indus­try are at $634 for sin­gles and $1,074 for fam­i­lies, 20.7 per­cent and 18.7 per­cent above aver­age, respectively.

The oppo­site trend can be seen in the mining/oil and gas extrac­tion indus­try, how­ev­er, where only 16.7 per­cent of plans offered are CDH­Ps, and employ­er HSA con­tri­bu­tions are also among the low­est. Cor­re­spond­ing­ly, CDHP enroll­ment in this indus­try is a mere 8.5 percent.

CDHP POPULARITY

CDH­Ps have proven to gen­er­ate cost sav­ings, accord­ing to UBA sur­veys. The aver­age annu­al health plan cost per employ­ee for all plan types in 2014 was $9,504. CDH­Ps appear to have the low­est annu­al costs per employ­ee, specif­i­cal­ly 6.4 per­cent less expen­sive than aver­age. In con­trast, PPO plans cost 9.7 per­cent more than CDH­Ps, yet they con­tin­ue to dom­i­nate the mar­ket in terms of plan dis­tri­b­u­tion and employ­ee enrollment.

“While CDHP offer­ings are up 8 per­cent from 2012, they are large­ly unchanged from 2013,” says Les McP­hear­son, CEO of UBA. “From an enroll­ment stand­point, how­ev­er, CDH­Ps have seen increas­es of more than 30 per­cent in the last two years (15.6 per­cent to 20.6 per­cent), despite over­all decreas­es in employ­er con­tri­bu­tions to HSAs. For large employ­ers and the mining/oil and gas extrac­tion indus­try, even mod­est increas­es in HSA con­tri­bu­tions can be a key part of the puz­zle in migrat­ing employ­ees to low­er cost CDHP plans.”

“HSA based plans are still grow­ing in pop­u­lar­i­ty,” con­tin­ues Sher­man. “In fact, for many employ­ers (espe­cial­ly those who have already offered HSA-based plans), the cur­rent move­ment is to offer a full replace­ment solu­tion, often with two or more HSA-based plans to allow for employ­ee choice,” says Sherman.

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Down­load a copy of the 2014 UBA Health Plan Sur­vey Exec­u­tive Sum­ma­ry by vis­it­ing http://bit.ly/18jLkDX.


About the UBA Health Plan Survey

Data in the 2014 UBA Health Plan Sur­vey is based on respons­es from 9,950 employ­ers spon­sor­ing 16,967 health plans nation­wide. The sur­vey’s focus is intend­ed to pro­vide a cur­rent snap­shot of the nation’s employ­ers rather than cov­ered employ­ees. Results are applic­a­ble to the small to mid­size mar­ket that makes up a major­i­ty of Amer­i­can busi­ness­es, as well as to larg­er employ­ers, pro­vid­ing bench­mark­ing data on a more detailed lev­el than any oth­er sur­vey. The 2014 UBA Health Plan Sur­vey offers more than just nation­al data and UBA rec­om­mends that employ­ers bench­mark with local data, which is more effec­tive when adjust­ing plan design, nego­ti­at­ing rates, and com­mu­ni­cat­ing val­ue to employees.

For a cus­tomized bench­mark sur­vey based on indus­try, region and busi­ness size, con­tact your local UBA Part­ner Firm.

Top­ics: employ­ers, HSA, sur­vey, High Deductible Health Plans

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