2014 Employer Health Benefits Survey

Section Seven: Employee Cost Sharing

In addition to any required premium contributions, most covered workers face cost sharing for the medical services they use.  Cost sharing for medical services can take a variety of forms, including deductibles (an amount that must be paid before most services are covered by the plan), copayments (fixed dollar amounts), and/or coinsurance (a percentage of the charge for services).  The type and level of cost sharing often vary by the type of plan in which the worker is enrolled.  Cost sharing may also vary by the type of service, such as office visits, hospitalizations, or prescription drugs.

The cost-sharing amounts reported here are for covered workers using services provided in-network by participating providers.  Plan enrollees receiving services from providers that do not participate in plan networks often face higher cost sharing and may be responsible for charges that exceed plan allowable amounts.  The framework of this survey does not allow us to capture all of the complex cost-sharing requirements in modern plans, particularly for ancillary services (such as durable medical equipment or physical therapy) or cost-sharing arrangements that vary across different settings (such as tiered networks).  Therefore, we do not collect information on all plan provisions and limits that affect enrollee out-of-pocket liability.

 General Annual Deductibles

• A general annual deductible is an amount that must be paid by the enrollee before most services are covered by their health plan. Non-grandfathered health plans are required to have some services such as preventative care available to enrollees without cost-sharing.  Some plans require enrollees to meet a service specific deductible such as on prescription drugs or hospital admissions in lieu of or in addition to a general deductible.
  • Eighty percent of covered workers are enrolled in a plan with a general annual deductible for single coverage; this is similar to 78% in 2013 (Exhibit 7.2). Since 2009, the percentage of covered workers with a general annual deductible has increased from 63% to 80%.
  • The percentage of covered workers enrolled in a plan with a general annual deductible is similar for small (3-199 workers) and larger firms (82% and 80%) (Exhibit 7.2).
  • The likelihood of having a deductible varies by plan type. Workers in HMOs are less likely to have a general annual deductible for single coverage compared to workers in other plan types. Sixty-three percent of workers in HMOs do not have a general annual deductible, compared to 30% of workers in POS plans and 15% of workers in PPOs (Exhibit 7.1).
  • Workers without a general annual plan deductible often have other forms of cost sharing for medical services. For workers without a general annual deductible for single coverage, 85% in HMOs, 78% in PPOs, and 77% in POS plans are in plans that require cost sharing for hospital admissions.  The percentages are similar for family coverage (Exhibit 7.4).

• The dollars amounts of general annual deductibles vary greatly by plan type and firm size.
  • The average annual deductible for covered workers across all plan types is $1,217. However, average deductibles vary considerably by plan type.  The average annual deductibles among those covered workers with a deductible for single coverage are $1,032 for HMOs, $843 for PPOs, $1,215 for POS plans, and $2,215 for HDHP/SOs (Exhibit 7.5).
  • The average general annual deductible for covered workers enrolled in single coverage has increased over time from $826 five years ago (Exhibit 7.7).
  • Deductible amounts for HMOs and HDHP/SOs are higher compared to 2013 ($1,032 vs. $729 for HMOs and $2,215 vs. $2,003 for HDHP/SOs) (Exhibit 7.7). Covered workers enrolled at small firms (3-199 workers) have a similar deductible for HMO plans as they did in 2013.  Covered workers at large firms enrolled in an HMO plan on average have a deductible of $726,¹ significantly more than the amount reported in 2013.
  • Deductibles are generally higher for covered workers in small firms (3-199 workers) than for covered workers in large firms (200 or more workers) across plan types (Exhibit 7.5). For covered workers in PPOs, deductibles in small firms are more than twice as large as deductibles in large firms ($1,420 vs. $657).  On average, covered workers at small firms face higher general annual deductibles than covered workers at large firms ($1,797 vs. $971) (Exhibit 7.5).
• There is considerable variation in the dollar values of general annual deductibles for workers at different firms. For example 33% of covered workers enrolled in a PPO plan with a general annual deductible for single coverage have a deductible of less than $500 and 10% have a deductible of $2,000 or more (Exhibit 7.11).
• For family coverage, the majority of workers with general annual deductibles have an aggregate deductible, meaning all family members’ out-of-pocket expenses count toward meeting the deductible amount. Among those with a general annual deductible for family coverage, the percentage of covered workers with an average aggregate general annual deductible is 65% for workers in HMOs, 53% for workers in PPOs, 86% for workers in POS plans and 85% for workers in HDHP/SOs (Exhibit 7.13).
  • The average amounts for workers with an aggregate deductible for family coverage are $2,328 for HMOs, $1,947 for PPOs, $2,470 for POS plans, and $4,522 for HDHP/SOs (Exhibit 7.14).
  • The average aggregate deductible amount for family coverage for HDHP/SOs is higher compared to 2013 ($4,522 vs. $4,079). Deductible amounts are similar to last year for all other plan types (Exhibit 7.15).
• The other type of family deductible, a separate per-person deductible, requires each family member to meet a separate per-person deductible amount before the plan covers expenses for that member. Most plans with separate per-person family deductibles consider the deductible met for all family members if a prescribed number of family members each reach their separate deductible amounts.  Plans may also require each family member to meet a separate per-person deductible until the family’s combined spending reaches a specified dollar amount.
  • For covered workers in health plans that have separate per-person general annual deductible amounts for family coverage, the average plan deductibles are $870 for HMOs, $821 for PPOs, $1,153 for POS plans, and $2,126 for HDHP/SOs (Exhibit 7.14).
  • Most covered workers in plans with a separate per-person general annual deductible for family coverage have a limit to the number of family members required to meet the separate deductible amounts (Exhibit 7.18).² Among those workers in plans with a limit on the number of family members, the most frequent number of family members required to meet the separate deductible amounts is two for HMO and HDHP/SO plans, and three for POS plans (Exhibit 7.19).
•  Forty-one percent of covered workers are in plans with a deductible of $1,000 or more for single coverage, similar to the percentage (38%) in 2013 (Exhibit 7.9).
  • Over the last five years, the percentage of covered workers with a deductible of $1,000 or more for single coverage has nearly doubled, increasing from 22% to 41% (Exhibit 7.9). Workers in small firms (3-199 workers) are more likely to have a general annual deductible of $1,000 or more for single coverage than workers in large firms (200 or more workers) (61% vs. 32%) (Exhibit 7.8).
  • Eighteen percent of covered workers are enrolled in a plan with a deductible of $2,000 or more. Thirty-four percent of covered workers at small firms (3-199 workers) have a general annual deductible of $2,000 or more, in contrast to just 11% in large firms (Exhibit 7.8).  The percentage of covered workers at large firms who face a deductible of $2,000 or more is significantly higher than last year (Exhibit 7.10).
•  The majority of covered workers with a deductible are in plans where the deductible does not have to be met before certain services, such as physician office visits or prescription drugs, are covered.
  • Large majorities of covered workers (76% in HMOs, 78% in PPOs, and 68% in POS plans) with general plan deductibles are enrolled in plans where the deductible does not have to be met before physician office visits for primary care are covered (Exhibit 7.21).
  • Similarly, among workers with a general annual deductible, large shares of covered workers in HMOs (95%), PPOs (93%), and POS plans (89%) are enrolled in plans where the general annual deductible does not have to be met before prescription drugs are covered (Exhibit 7.21).

Hospital and Outpatient Surgery Cost Sharing

• In order to better capture the prevalence of combinations of cost sharing for inpatient hospital stays and outpatient surgery, the survey was changed to ask a series of yes or no questions beginning in 2009. The new format allowed respondents to indicate more than one type of cost sharing for these services, if applicable.  Previously, the questions asked respondents to select just one response from a list of types of cost sharing, such as separate deductibles, copayments, coinsurance, and per diem payments (for hospitalization only).  Due to the change in question format, the distribution of workers with types of cost sharing does not equal 100% as workers may face a combination of types of cost sharing.  In addition, the average copayment and coinsurance rates for hospital admissions include workers who may have a combination of these types of cost sharing.

• Whether or not a worker has a general annual deductible, most workers face additional types of cost sharing when admitted to a hospital or having outpatient surgery (such as a copayment, coinsurance, or a per diem charge).
  • For hospital admissions, 62% of covered workers have coinsurance and 15% have copayments. Lower percentages of workers have per day (per diem) payments (5%), a separate hospital deductible (3%), or both copayments and coinsurance (10%), while 15% have no additional cost sharing for hospital admissions after any general annual deductible has been met (Exhibit 7.22).  For covered workers in HMO plans, copayments are more common (38%) and coinsurance (28%) is less common than in other plan types.
  • The percentage of covered workers in a plan which requires coinsurance for hospital admission has increased from 55% in 2011 to 62% in 2014.
  • The average coinsurance rate is 19%; the average copayment is $280 per hospital admission; the average per diem charge is $297; and the average separate annual hospital deductible is $490 (Exhibit 7.24).
  • The cost-sharing provisions for outpatient surgery are similar to those for hospital admissions, as most workers have coinsurance or copayments. Sixty-four percent of covered workers have coinsurance and 16% have copayments for an outpatient surgery episode.  In addition, 1% have a separate annual deductible for outpatient surgery, and 7% have both copayments and coinsurance, while 18% have no additional cost sharing after any general annual deductible has been met (Exhibit 7.23).
  • For covered workers with cost sharing for outpatient surgery, the average coinsurance is 19% and the average copayment is $157 (Exhibit 7.24).

Cost Sharing for Physician Office Visits

• The majority of covered workers are enrolled in health plans that require cost sharing for an in-network physician office visit, in addition to any general annual deductible.³
  • The most common form of physician office visit cost sharing for in-network services is copayments. Seventy-three percent of covered workers have a copayment for a primary care physician office visit and 18% have coinsurance.  For office visits with a specialty physician, 72% of covered workers have copayments and 21% have coinsurance.  Workers in HMOs, PPOs, and POS plans are much more likely to have copayments than workers in HDHP/SOs for both primary care and specialty care physician office visits.  The majority of workers in HDHP/SOs have coinsurance (56%) or no cost sharing after the general annual plan deductible is met (24%) for primary care physician office visits (Exhibit 7.25).
  • Among covered workers with a copayment for in-network physician office visits, the average copayment is $24 for primary care and $36 for specialty physicians (Exhibit 7.26), similar to $23 and $35 reported in 2013.
  • Among workers with coinsurance for in-network physician office visits, the average coinsurance rates are 18% for a visit with a primary care physician and 19% for a visit with a specialist (Exhibit 7.26).

Out-Of-Pocket Maximum Amounts

• Most covered workers are in a plan that partially or totally limits the cost sharing that a plan enrollee must pay in a year. These limits are generally referred to as out-of-pocket maximum amounts.  The ACA requires that non-grandfathered health plans with a plan year starting in 2014 have an out-of-pocket maximum of $6,350 or less for single coverage and $12,700 for family coverage.  Firms that either renewed their plan prior to January 1st (known as “early renewals”) or plans which are grandfathered are not required to comply with this provision.  As plans lose their grandfathered status, more firms will be subject to this provision.  Many plans have complex out-of-pocket structures, increasing the difficulty of accurately collecting information on this element of plan design.

• In 2014, 94% percent of covered workers have an out-of-pocket maximum for single coverage, significantly more than 88% in 2013 (Exhibit 7.37). Six percent of covered workers are in a plan that does not limit the amount of cost sharing enrollees have to pay for either single or family coverage (Exhibit 7.31).
  • Covered workers without an out-of-pocket maximum, however, may not have large cost-sharing responsibilities. For example, 57% of covered workers in PPOs with no out-of-pocket maximum for single coverage have no general annual deductible compared to 86% of covered workers in PPOs who have an out-of-pocket limit.  Among covered workers enrolled in a PPO plan without an out-of-pocket limit, less than one percent have a coinsurance for hospital admission and three percent for outpatient surgery.

• For covered workers with out-of-pocket maximums, there is wide variation in spending limits.
  • Twenty-one percent of covered workers with an out-of-pocket maximum for single coverage have an out-of-pocket maximum of less than $2,000, while 9% have an out-of-pocket maximum of $6,000 or more (Exhibit 7.32).
  • Covered workers with an out-of-pocket maximum in small firms (3 to 199 workers) are more likely than such workers in larger firms to be covered by a plan with an out-of-pocket maximum of $3,000 or more (61% vs. 51%).
  • The percentage of covered workers who either do not have an out-of-pocket limit or have an out of pocket limit of more than $6,350 dollars for single coverage decreased from 14% in 2013 to 7% in 2014 (Exhibit 7.37).
  • Like deductibles, some plans have an aggregate out-of-pocket maximum amount for family coverage that applies to cost sharing for all family members, while others have a per-person out-of-pocket maximum that limits the amount of cost sharing that the family must pay on behalf of each family member. Sixty-eight percent of covered workers in a plan with an out-of-pocket maximum are in a plan with an aggregate limit (Exhibit 7.33).
  • For covered workers with an aggregate out-of-pocket maximum for family coverage, 21% have an out-of-pocket maximum of less than $4,000 and 21% have an out-of-pocket maximum of $10,000 or more (Exhibit 7.34). Among workers with separate per-person out-of-pocket limits for family coverage, 72% have out-of-pocket maximums of less than $4,000 (Exhibit 7.35).

• The ACA requires that most in-network deductibles, copays, and coinsurances are counted towards the out-of-pocket limit for non-grandfathered plans for plan years starting after January 1st, 2014. As discussed above some covered workers remain in plans that are not subject to this provision.