Employers appear to be embracing higher cost sharing as a strategy for reducing the growth in health care costs. Twenty percent of employers offering health benefits offer a health plan with a high-deductible (i.e., defined as at least $1,000 for single coverage and $2,000 for family coverage).6 Jumbo employers (5,000 or more workers) are more likely than smaller firms to offer such a plan.
Recent changes in law also have permitted the establishment of new types of savings arrangements for health care, the two most common being health reimbursement arrangements (HRAs) and health savings accounts (HSAs). HRAs and HSAs are both financial accounts that workers or other individuals can use to pay for health care services. [See Definitions] While they serve similar purposes, HSAs and HRAs are set up and operate quite differently. These new savings arrangements may be (or must be in the case of HSAs) combined with a high-deductible health plan, or HDHP (defined in this survey as having a deductible of at least $1,000 for single coverage and $2,000 for family coverage). In the survey, we focused specifically on HRAs that are offered along with an HDHP. For convenience, we will refer to an HDHP offered with an HRA as an “HDHP/HRA” and to a HDHP that meets the legal requirements to permit a person to establish an HSA as an “HSA qualified HDHP”. Almost four percent of employers that offer health benefits in 2005 offer their workers an HDHP/HRA or an HSA qualified HDHP. About 2.4 million workers are enrolled in an HDHP/HRA or an HSA qualified HDHP. This estimate of the number of workers enrolled in an HDHP/HRA or an HSA qualified HDHP does not include federal workers because the federal government is not included in the survey.
Click here to see definitions of Health Reimbursement Arrangements and Health Savings Accounts
Percent Offering HDHPs and Savings Account Options
- Twenty percent of firms offering health benefits offer an HDHP to at least some their workers. The prevalence of HDHPs is up from 10% in 2004 and 5% in 2003, although we note that the definition of a HDHP changed somewhat for the 2005 survey (see Footnote 6). This estimate is of all HDHPs, regardless of whether they are offered with an HRA, are HSA qualified, or neither. Jumbo firms (5,000 or more workers) are the most likely to offer an HDHP: 33% of jumbo firms offering health benefits offer such a plan to at least some of their workers (Exhibit 8.1).
- About 4% of all firms offering health benefits offer an HDHP/HRA, an HSA qualified HDHP, or both (Exhibit 8.2).
- Among firms offering health benefits, 1.9% offer an HDHP/HRA and 2.3% offer an HSA qualified HDHP. About 1.6 million workers are enrolled in an HDHP/HRA and about 810,000 workers are enrolled in an HSA qualified HDHP (Exhibit 8.2).
- Large firms (1,000 or more workers) are more likely to offer one of these arrangements than firms overall (10% compared to 4%).
- About 25% of workers offered an HDHP/HRA and about 15% of workers offered an HSA qualified HDHP participate in the arrangement that is offered (Exhibit 8.4). About half of the workers enrolled in an HDHP/HRA or an HSA qualified HDHP had the option of another health plan.
Deductible Levels and Out-of-Pocket Limits
- Average annual deductibles in these arrangements, as expected, are relatively high when compared to the average annual deductibles for health plans generally.
- In HDHP/HRAs, the average annual deductible is $1,870 for single coverage and $3,686 for family coverage. Workers in HDHP/HRAs on average face a maximum annual out-of-pocket liability for cost-sharing of $2,859 for single coverage and $5,075 annually for family coverage (Exhibit 8.4).7
- In HSA qualified HDHPs, the average annual deductible is $1,901 for single coverage and $4,070 for family coverage. Workers in HSA qualified HDHPs on average face an annual maximum out-of-pocket liability for cost-sharing of $2,551 for single coverage and $4,661 for family coverage (Exhibit 8.4).8
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