2017 Employer Health Benefits Survey

PREMIUM COSTS FOR SINGLE AND FAMILY COVERAGE

• The average premium for single coverage in 2017 is $6,690 per year. The average premium for family coverage is $18,764 per year [Figure 1.1].
• The average annual premium for family coverage for covered workers in small firms ($17,615) is lower than the average premium for covered workers in large firms ($19,235) [Figure 1.2].
• The average annual premiums for covered workers in HDHP/SOs are lower for single coverage ($6,024) and family coverage ($17,581) than overall average premiums. The average premiums for covered workers enrolled in PPO plans are higher for single ($6,965) and family coverage ($19,481) than the overall plan average [Figure 1.1].
• The average premiums for covered workers are lower in the South ($6,372 for single coverage and $18,038 for family coverage) than the average premiums for covered workers in all other regions. The average premium for family coverage for covered workers in the Northeast ($20,092) is higher than the average family premium for covered workers in all other regions [Figure 1.3].
• The average premiums for covered workers vary across industries, with those in the retail industry being particularly low ($5,716 for single coverage and $16,920 for family coverage) [Figure 1.4].
• The average premiums for covered workers in firms with a relatively large share of younger workers (where at least 35% of the workers are age 26 or younger) are lower than the average premiums for covered workers in firms with a smaller share of younger workers ($5,922 vs. $6,762 for single coverage and $16,893 vs. $18,939 for family coverage) [Figures 1.5 and 1.6].
• Premiums also vary by firm wage level. The average premiums for covered workers in firms with a relatively large share of lower-wage workers (where at least 35% of workers earn $24,000 a year or less) are less than the average premiums at firms with a smaller share of lower-wage workers ($6,035 vs. $6,739 for single coverage and $16,376 vs. $18,942 for family coverage) [Figures 1.5 and 1.6].
• The average premiums for covered workers in firms with at least some union workers are higher than the average premiums for covered workers in firms without union workers ($7,183 vs. $6,434 for single coverage and $19,885 vs. $18,177 for family coverage) [Figures 1.5 and 1.6].
• There is also variation in premiums by type of firm ownership. For both single and family coverage, covered workers at private for-profit firms have lower average annual premiums than covered workers at public firms or private not-for-profit firms [Figures 1.5 and 1.6].

PREMIUM DISTRIBUTION

• There is considerable variation in premiums for both single and family coverage.
  • Twenty percent of covered workers are employed in a firm with a single premium at least 20% higher than the average single premium, while 21% of covered workers are in firms with a single premium less than 80% of the average single premium [Figures 1.7].
  • For family coverage, 17% of covered workers are employed in a firm with a family premium at least 20% higher than the average family premium, while 21% of covered workers are in firms with a family premium less than 80% of the average family premium [Figure 1.7].
• Six percent of covered workers are in a firm with a premium of at least $10,000 a year for single coverage [Figure 1.8]. Seven percent of covered workers are in a firm with a premium of at least $26,000 a year for family coverage [Figure 1.9].

PREMIUM CHANGES OVER TIME

• The average premium for single coverage is 4% higher than the single premium last year and the average premium for family coverage is 3% higher than the average family premium last year [Figure 1.10].
  • The average premiums for single and family coverage have grown at the same rate (19%) since 2012.
  • The average family premiums for both small and large firms have increased at similar rates since 2012 (15% for small firms and 20% for large firms). For small firms, the average family premium rose from $15,253 in 2012 to $17,615 in 2017. For large firms, the average family premium rose from $15,980 in 2012 to $19,235 in 2017 [Figures 1.11 and 1.12].
  • The $18,764 average family premium in 2017 is 19% higher than the average family premium in 2012 and 55% higher than the average family premium in 2007 [Figure 1.10] . The 19% family premium growth in the last five years is smaller than the 30% growth between 2007 and 2012, or the 51% premium growth between 2002 and 2007 [Figure 1.13].
  • The average family premiums for both small and large firms have increased at similar rates since 2007 (49% for small firms and 57% for large firms). For small firms, the average family premium rose from $11,835 in 2007 to $17,615 in 2017. For large firms, the average family premium rose from $12,233 in 2007 to $19,235 in 2017 [Figures 1.11 and 1.12].
• For covered workers in large firms, over the last five years, the average family premium in firms that are fully insured has grown at a similar rate to the average family premium for covered workers in fully or partially self-funded firms (16% for fully insured plans and 21% for self-funded firms) [Figure 1.14].

FIRM OFFER RATES

• In 2017, 53% of firms offer health benefits, similar to the 56% who reported doing so in 2016 [Figure 2.1].
  • Ninety-nine percent of large firms offer health benefits to at least some of their workers. In contrast, only 53% of small firms offer health benefits in 2017 [Figures 2.2 and 2.3]. The percentages of both small and large firms offering health benefits to at least some of their workers are similar to those of last year [Figure 2.2].
  • The overall percentage of firms offering coverage in 2017 is less than the percentage offering coverage in 2012 (61%) and 2007 (59%) [Figure 2.1]. As we reported last year, there has been a long-term decline in the offer and coverage rates for employer-provided coverage, particularly among smaller firms.
  • Since most firms in the country are small, variation in the overall offer rate is driven largely by changes in the percentages of the smallest firms (3-9 workers) offering health benefits. For more information on the distribution of firms in the country, see the Survey Design and Methods Section and Figure M.4.¹⁴
  • Ninety-six percent of firms with 100 or more workers offer health benefits to at least some of their workers in 2017. Ninety percent of firms with 50-99 workers offer benefits to at least some workers [Figure 2.4].
  • Eighty-nine percent of all workers are employed by a firm that offers health benefits to at least some of its workers [Figure 2.26].
• Offer rates vary across different types of firms.
  • Smaller firms are less likely to offer health insurance: 40% of firms with 3-9 workers offer coverage, compared to 78% of firms with 25-49 workers, and 92% of firms with 50-199 workers [Figure 2.3].
  • Offer rates throughout different firm size categories in 2017 remain similar to those reported in 2016 [Figure 2.2].

PART-TIME AND TEMPORARY WORKERS

• Among firms offering health benefits, relatively few offer benefits to their part-time and temporary workers.
  • The ACA defines full-time workers as those who on average work at least 30 hours per week, and part-time workers as those who on average work fewer than 30 hours per week. The employer shared responsibility provision of the ACA requires that firms with at least 50 full-time equivalent employees offer full-time employees coverage that meets minimum standards or be assessed a penalty.¹⁵ Beginning in 2015, we modified the survey to explicitly ask employers whether they offered benefits to employees working fewer than 30 hours. Our previous question did not include a definition of “part-time”. For this reason, historical data on part-time offer rates are shown, but we did not test whether the differences between 2014 and 2015 were significant. Many employers may work with multiple definitions of part-time; one for their compliance with legal requirements and another for internal policies and programs.
  • In 2017, 13% of all firms that offer health benefits offer them to part-time workers [Figure 2.7]. Large firms are more likely to offer health benefits to part-time workers than small firms (31% vs. 12%) [Figure 2.9].
• A small percentage (5%) of firms offering health benefits offer them to temporary workers [Figure 2.8]. Among firms offering health benefits, large firms are more likely than small firms to offer benefits to temporary workers (13% vs. 5%) [Figure 2.10]. The percentage of large firms offering health benefits to temporary workers is not statistically different from the 17% reported in 2016 [Figure 2.8].

SPOUSES, DEPENDENTS AND DOMESTIC PARTNER BENEFITS

• The majority of firms offering health benefits offer to spouses and dependents, such as children. In 2017, 94% of small firms and 100% of large firms offering health benefits offer coverage to spouses, similar to last year. Ninety-two percent of small firms and 100% of large firms offering health benefits cover other dependents, such as children, similar to last year. Five percent of small firms offering health benefits offer only single coverage to employees [Figure 2.11].
• Employers were also asked whether same-sex or opposite-sex domestic partners were allowed to enroll in the firm’s coverage. While definitions may vary, employers often define domestic partners as an unmarried couple who has lived together for a specified period of time. Firms may define domestic partners separately from any legal requirements a state may have, and also, employers may have a different policy in different parts of the country or for different workers.
  • In 2017, 36% of firms offering health benefits offer coverage to opposite-sex domestic partners, similar to the 27% who did so in 2016. Forty percent of firms offering health benefits offer coverage to same-sex domestic partners, similar to the 32% who did so last year [Figure 2.13].
  • When firms are asked if they offer health benefits to opposite or same-sex domestic partners, many report that they have not encountered this issue. At some small firms, the firm may not have formal human resource policies on domestic partners simply because none of the firm’s workers have asked to cover a domestic partner. Regarding health benefits for opposite-sex domestic partners, 30% of firms report in 2017 that they have not encountered this request or that the question was not applicable [Figure 2.12]. The vast majority of firms in the United States are small businesses [Figure M.1]. Therefore, statistics about the percentage of firms that offer domestic partner benefits are largely determined by small businesses. More small firms (31%) than large firms (2%) indicate that they have not encountered this request or that the question was not applicable [Figure 2.12]. Regarding health benefits for same-sex domestic partners, 34% of firms report that they have not encountered the request or that the question was not applicable. More small firms (35%) than large firms (4%) report that they have not encountered the issue of offering benefits to same-sex domestic partners [Figure 2.12].
  • Among large firms not offering health benefits to same-sex domestic partners, 3% stopped offering them within the last 12 months.
• Over half (57%) of firms that offer health benefits to spouses also offer coverage to same-sex spouses, with large firms more likely than small firms to offer coverage to same-sex spouses (88% vs. 56%). Small firms are more likely than large firms to report that this request has not been encountered (32% vs. 4%) [Figure 2.15].
• Among all firms that offer health benefits, 15% report providing additional compensation or benefits to employees if they enroll in a spouse’s plan, and 18% provide additional compensation or benefits to employees if they do not participate in the firm’s health benefits [Figure 2.16].

SUPPLEMENTAL AND VOLUNTARY BENEFITS

• Firms offering health benefits also offer a variety of supplemental and other health benefits to their workers. Large firms are more likely than small firms to offer these benefits [Figure 2.17]. Among firms offering health benefits:
  • Sixty-seven percent of small firms and 97% of large firms offer dental benefits to their employees. Of firms offering these benefits, 67% make a contribution toward the cost of the coverage [Figure 2.18].
  • Forty-seven percent of small firms and 82% of large firms offer vision benefits to their employees. Of firms offering these benefits, 54% make a contribution toward the cost of the coverage [Figure 2.18].
  • Critical illness insurance provides a cash benefit when an enrollee is diagnosed with a specified condition, such as cancer. Twenty-three percent of small firms and 46% of large firms offer critical illness insurance to their employees. Of firms offering these benefits, 3% make a contribution toward the cost of the coverage [Figure 2.18].
  • Hospital indemnity plans, sometimes known as hospital cash plans, provide a cash benefit when an enrollee is admitted to the hospital or has a certain type of outpatient surgery. Sixteen percent of small firms and 28% of large firms offer hospital indemnity insurance to their employees. Of firms offering these benefits, 5% make a contribution toward the cost of the coverage [Figure 2.18].
  • Long-term care insurance covers assistance with daily living not generally covered by health insurance such as care from a home health worker or nursing home. Sixteen percent of small firms and 25% of large firms offer long-term care insurance to their employees, similar to the percentages in 2011. Of firms offering these benefits, 47% make a contribution toward the cost of the coverage [Figure 2.18].

FIRMS NOT OFFERING HEALTH BENEFITS

• The survey asks firms that do not offer health benefits if they have offered insurance or shopped for insurance in the recent past, and about their most important reasons for not offering coverage. Because such a small percentage of large firms report not offering health benefits, we present responses for small non-offering firms only.
  • The cost of health insurance remains the primary reason cited by firms for not offering health benefits. Among small firms not offering health benefits, 44% cite high cost as “the most important reason” for not doing so, followed by “the firm is too small” (17%) [Figure 2.22]. Relatively few small firms indicate that they do not offer because they believe that employees will get a better deal on the health insurance exchanges (2%).
• Many small non-offering firms have either offered health insurance in the past five years, or have shopped for health insurance in the past year. Twenty percent of small non-offering firms have offered health benefits in the past five years, and 13% have shopped for coverage in the past year [Figure 2.23]. The 20% of small non-offering firms that have offered coverage in the past five years is similar to the 19% reported last year.
• Among small non-offering firms that report they stopped offering coverage within the last five years, 18% stopped offering coverage within the last year.
• Among small non-offering firms, 16% report that they provide funds to their employees to purchase health insurance on their own in the individual market or through a health insurance exchange [Figure 2.24]. Forty percent of these firms provide workers between $2,000 and $5,999 a year to purchase non-group insurance [Figure 2.25].

ELIGIBILITY

• Not all workers are eligible for the health benefits offered by their firm, and not all eligible workers “take up” (i.e., elect to participate in) the offer of coverage. The share of workers covered in a firm is a product of both the percentage of workers who are eligible for the firm’s health insurance and the percentage that choose to take up the benefit. The percentage of workers eligible for health benefits at offering firms in 2017 is similar to last year and the recent past for both small and large firms [Figure 3.1].
  • Seventy-nine percent of workers in firms offering health benefits are eligible for the coverage offered by their employer. The percentage of eligible workers is higher in small firms with 3-24 workers (84%) than other firm sizes [Figure 3.2].
  • Eligibility varies considerably by firm wage level. Workers in firms with a relatively large share of lower-wage workers (where at least 35% of workers earn $24,000 a year or less) are less likely to be eligible for health benefits than workers in firms with a smaller share of lower-wage workers (68% vs. 81%) [Figure 3.3].
  • Workers in firms with a relatively large share of higher-wage workers (where at least 35% earn $60,000 or more annually) are more likely to be eligible for health benefits than workers in firms with a smaller share of higher-wage workers (88% vs. 73%) [Figure 3.3].
  • Eligibility also varies by the age of the workforce. Those in firms with a relatively small share of younger workers (where fewer than 35% of the workers are age 26 or younger) are more likely to be eligible for health benefits than those in firms with a larger share younger workers (81% vs. 64%) [Figure 3.3].
  • The average eligibility rate is particularly low in retail firms (54%) [Figure 3.2].

TAKE-UP RATE

• A large share of workers who are offered health benefits at work elect to enroll. In 2017, 78% of eligible workers take up coverage when it is offered to them, similar to last year [Figure 3.1].¹⁷ Eligible workers in large firms (200 or more workers) are more likely to take up coverage when offered than eligible workers in small firms (3-199 workers) (79% vs. 75%) [Figure 3.2].
  • The likelihood of a worker accepting a firm’s offer of coverage varies by firm wage level. Eligible workers in firms with a relatively small share of lower-wage workers (where fewer than 35% of workers earn $24,000 a year or less) are more likely to take up coverage than eligible workers in firms with a larger share of lower-wage workers (79% vs. 65%) [Figure 3.4].
  • Eligible workers in firms with a relatively large share of higher-wage workers (where at least 35% earn $60,000 or more annually) are more likely to take up coverage than those in firms with a smaller share of higher-wage workers (82% vs. 74%) [Figure 3.4].
  • Eligible workers in firms with relatively large share of younger workers (where at least 35% of the workers are age 26 or younger) are less likely to take up coverage than those in firms with a smaller share of younger workers (70% vs. 79%) [Figure 3.4].
  • The percentage of eligible workers taking up benefits in offering firms also varies by industry, with a lower average take-up rate at retail firms (63%) and a higher average take-up rate at state and local governments (89%) [Figure 3.2].
• The share of eligible workers taking up benefits in offering firms (78%) has decreased over time, from 81% in 2012 and 82% in 2007.

COVERAGE

• The percentage of workers at firms offering health benefits that are covered by their firm’s health plan in 2017 is 62%, the same percentage as last year [Figure 3.1].
  • The coverage rate at firms offering health benefits is the same for small firms and large firms in 2017. These rates are similar to the rates last year for both small firms and large firms [Figure 3.1].
• There is significant variation by industry in the coverage rate among workers in firms offering health benefits. The average coverage rate is particularly low in retail (34%) and service (57%) industries [Figure 3.2].
• Among workers in firms offering health benefits, those in firms with a relatively large share of lower-wage workers (where at least 35% of workers earn $24,000 a year or less) are less likely to be covered by their own firm than workers in firms with a smaller share of lower-wage workers (44% vs. 64%). A comparable pattern exists in firms with a relatively large share of higher-wage workers (where at least 35% earn $60,000 or more annually), with workers in these firms being more likely to be covered by their employer’s health benefits than those in firms with a smaller share of higher-wage workers (72% vs. 54%) [Figure 3.5].
• Among workers in firms offering health benefits, those in firms with a relatively small share of younger workers (where fewer than 35% of the workers are age 26 or younger) are more likely to be covered by their own firm than those in firms with a larger share of younger workers (64% vs. 45%) [Figure 3.5].
• Among workers in all firms, including those that offer and those that do not offer health benefits, 55% of workers are covered by health benefits offered by their employer, the same percentage as last year. The coverage rate in 2017 is lower than the coverage rate in 2007 (59%).

WAITING PERIODS

• Waiting periods are a specified length of time after beginning employment before workers are eligible to enroll in health benefits. With some exceptions, the Affordable Care Act requires that waiting periods cannot exceed 90 days.¹⁸ For example, employers are permitted to have orientation periods before the waiting period begins which, in effect, means a worker is not eligible for coverage 3 months after hire. If a worker is eligible to enroll on the 1st of the month after three months of employment, this survey rounds up and considers the firm’s waiting period four months. For these reasons, some employers still have waiting periods exceeding the 90-day maximum.
• Seventy-six percent of covered workers face a waiting period before coverage is available, similar to last year [Figure 3.9]. Covered workers in small firms are more likely than those in large firms to have a waiting period (84% vs. 73%) [Figure 3.7].
• The average waiting period among covered workers who face a waiting period is 1.9 months [Figure 3.7]. A small percentage (2%) of covered workers with a waiting period have a waiting period of more than 3 months.
  • Respondents with waiting periods greater than 4 months generally indicated that employees had training or orientation periods, or measurement periods in which they were employees but were not eligible for health benefits. Some employers have measurement periods to determine whether variable hour employees will meet the requirements for the firm’s health benefits.¹⁹

AUTO ENROLLMENT

• Thirty-one percent of firms offering health benefits, including 35% of firms with 3 to 49 workers and 18% of firms with 5,000 or more workers, automatically enroll eligible workers in health benefits after any applicable waiting period [Figure 3.10].

VARIATION IN WORKER CONTRIBUTIONS TO THE PREMIUM

• About four-fifths of covered workers are in a plan where the employer contributes at least half of the premium for both single and family coverage.
  • Fourteen percent of covered workers are in a plan where the employer pays the entire premium for single coverage; 3% of covered workers are in a plan where the employer pays the entire premium for family coverage [Figure 6.18].
• Covered workers in small firms are much more likely than covered workers in large firms to be in a plan where the employer pays 100% of the premium. Thirty-three percent of covered workers in small firms have an employer that pays the full premium for single coverage, compared to 6% of covered workers in large firms [Figure 6.17]. For family coverage, 10% of covered workers in small firms have an employer that pays the full premium, compared to 1% of covered workers in large firms [Figure 6.16].
• Sixteen percent of covered workers are in a plan where enrollees have a contribution of more than 50% of the premium for family coverage [Figure 6.18].
  • Thirty-six percent of covered workers in small firms work in a firm where the enrollee contribution for family coverage is more than 50% of the premium, compared to 8% of covered workers in large firms [Figure 6.18].
  • For single coverage, 3% of covered workers in small firms and 2% of covered workers in large firms are in a plan where the enrollee contribution is more than 50% of the premium. The difference between the estimates for small and large firms is not statistically significant [Figure 6.18].
• There is substantial variation among workers in small firms and workers in large firms in the dollar amounts they contribute for single and family coverage. For example, among covered workers in small firms, 10% have no contribution for family coverage, while 19% have a contribution of more than $12,000. Among covered workers in large firms, 1% have no contribution for family coverage, while 4% have a contribution of more than $12,000 [Figure 6.16].

DIFFERENCES BY FIRM CHARACTERISTICS

• The percentage of the premium paid by covered workers also varies by firm characteristics.
  • Covered workers in firms with a relatively large share of lower-wage workers (where at least 35% of workers earn $24,000 a year or less) on average have higher contribution rates for single coverage (23% vs. 18%) and family coverage (37% vs. 31%) than those in firms with a smaller share of lower-wage workers [Figures 6.22 and 6.23].
  • Covered workers in firms with a relatively large share of higher-wage workers (where at least 35% earn $60,000 or more annually) on average have lower contribution rates for family coverage than those in firms with a smaller share of higher-wage workers (29% vs. 34%) [Figure 6.23].
  • Covered workers in large firms that have at least some union workers on average have lower contribution rates for family coverage than those in firms without any union workers (25% vs. 30%) [Figures 6.23].
  • Covered workers in large firms that are partially or completely self-funded on average have lower contribution rates for family coverage than workers in large firms that are fully insured (26% vs. 35%) [Figure 6.23].²³
  • Covered workers in private for-profit firms on average have higher contribution rates for both single coverage (21%) and family coverage (33%) than workers in public organizations and private not-for-profit firms [Figures 6.22 and 6.23].

CONTRIBUTION APPROACHES

• Firms take different approaches for contributing toward family coverage. Among firms offering health benefits, 45% of small firms and 15% of large firms contribute the same dollar amount for single coverage as for family coverage, which means that the worker must pay the entire difference between the cost of single and family coverage if they wish to enroll their family members. Forty-five percent of small firms and 75% of large firms make a larger dollar contribution for family coverage than for single coverage [Figure 6.27].

CHANGES OVER TIME

• The average worker contributions for single and family coverage have increased 75% and 74%, respectively, over the last 10 years, and 28% and 32%, respectively, over the last five years.
• Over the last five years, the average worker contribution for family coverage has increased faster than the average employer contribution for family coverage (32% vs. 14% ) and the last ten years (74% vs. 48% ).

GENERAL ANNUAL DEDUCTIBLES FOR WORKERS IN PLANS WITH DEDUCTIBLES

• A general annual deductible is an amount that must be paid by enrollees before most services are covered by their health plan. Non-grandfathered health plans are required to cover some services such as preventive care 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 annual deductible.
  • Eighty-one percent of covered workers are enrolled in a plan with a general annual deductible for single coverage, similar to 83% in 2016, but an increase from 72% in 2012 [Figure 7.2].
  • The percentage of covered workers enrolled in a plan with a general annual deductible for single coverage is similar for small firms (3-199 workers) and large firms (200 or more workers) (77% and 83%) [Figure 7.2].
  • The likelihood of having a deductible varies by plan type [Figure 7.1]. Covered workers in HMOs are less likely to have a general annual deductible for single coverage than workers in other plan types. Sixty-two percent of workers in HMOs do not have a general annual deductible for single coverage, compared to 35% of workers in POS plans and 14% of workers in PPOs.
• For covered workers in a plan with a general annual deductible, the average annual deductible for single coverage is $1,505, similar to the average deductible ($1,478) last year [Figures 7.3 and 7.10].
  • For covered workers in plans with a general annual deductible, the average deductibles for single coverage are $1,175 in HMOs, $1,046 in PPOs, $1,301 in POS plans, and $2,304 in HDHP/SOs [Figure 7.6].
  • The average deductibles for single coverage are higher across plan types for covered workers in small firms than for covered workers in large firms. For covered workers in PPOs with a general annual deductible, for example, the average deductible amount for single coverage in small firms is much higher than the average deductible amount in large firms ($1,594 vs. $856) [Figure 7.6]. Overall, for covered workers in plans with a general annual deductible, the average deductible amount for single coverage in small firms is higher than the average deductible amount in large firms ($2,120 vs. $1,276) [Figure 7.3].
  • Among covered workers in plans with a general annual deductible, the average deductible for workers in firms with a relatively large share of lower-wage workers (where at least 35% of workers earn $24,000 a year or less) is higher than the average deductible for covered workers in firms with a smaller share of lower-wage workers ($2,234 vs. $1,449) [Figure 7.4].
  • The average general annual deductible for single coverage for covered workers in plans with a deductible has increased 37% over the last five years, from $1,097 in 2012 to $1,505 in 2017 [Figure 7.8].
• There is considerable variation in the dollar values of general annual deductibles for covered workers at different firms. For example, 20% of covered workers enrolled in a PPO plan with a general annual deductible for single coverage have a deductible of less than $500, while 13% have a deductible of $2,000 or more [Figure 7.19].

GENERAL ANNUAL DEDUCTIBLES AMONG ALL COVERED WORKERS

• As discussed above, the share of covered workers in plans with a general annual deductible has increased significantly over time: from 59% in 2007, to 72% in 2012, to 81% in 2017 [Figure 7.2], as have the average deductible amounts for covered workers in plans with deductibles: from $616 in 2007, to $1,097 in 2012, to $1,505 in 2017 [Figure 7.10]. Neither trend by itself captures the full impact of changes in deductibles on covered workers. We can look at the average impact of both trends together on covered workers by assigning a zero deductible value to covered workers in plans with no deductible and looking at how the resulting averages change over time. These average deductible amounts are lower in any given year but the changes over time reflect both the higher deductibles in plans with deductibles and the fact that more workers face them.
  • Using this approach, the average general annual deductible for single coverage for all covered workers in 2017 is $1,221 [Figures 7.9 and 7.10].
  • The 2017 value is 52% higher than the average general annual deductible of $802 in 2012 and 255% higher than the average general annual deductible of $343 in 2007 [Figures 7.9 and 7.10].
• Another way to look at deductibles is the percentage of all covered workers who are in a plan with a deductible that exceeds certain thresholds. Fifty-one percent of covered workers are in plans with a general annual deductible of $1,000 or more for single coverage, the same percentage as last year [Figure 7.12].
  • Over the last five years, the percentage of covered workers with a general annual deductible of $1,000 or more for single coverage has grown substantially, increasing from 34% to 51% [Figure 7.12].
  • Workers in small firms are more likely to have a general annual deductible of $1,000 or more for single coverage than workers in large firms (58% vs. 48%) [Figure 7.11].
  • Twenty-two percent of covered workers are enrolled in a plan with a deductible of $2,000 or more, similar to the percentage last year (23%) [Figure 7.14]. Thirty-seven percent of covered workers in small firms have a general annual deductible of $2,000 or more, as compared to 15% in large firms [Figure 7.14].
• One of the reasons for the growth in deductible amounts has been the growth in enrollment in HDHP/SOs, which have higher deductibles than other plans. While growing deductibles in other plan types generally increases enrollee out-of-pocket liability, the shift in enrollment to HDHP/SOs does not necessarily do so because most HDHP/SO enrollees receive an account contribution from their employers, which in essence reduces the high cost sharing in these plans.
  • Twenty-one percent of covered workers in an HDHP with an HRA and 2% of covered workers in an HSA-qualified HDHP receive an account contribution for single coverage at least equal to their deductible, while another 35% of covered workers in an HDHP with an HRA and 30% of covered workers in an HSA-qualified HDHP receive account contributions that, if applied to their deductible, would reduce the deductible to $1,000 or less [Figure 7.16].
  • If we reduce the deductibles that workers face by employer account contributions, the percentage of covered workers with a deductible liability of $1,000 or more would be reduced from 51% to 40% [Figures 7.12 and 7.13].

GENERAL ANNUAL DEDUCTIBLES FOR WORKERS ENROLLED IN FAMILY COVERGE

• For family coverage, the majority of covered workers with general annual deductibles have an aggregate deductible, which means that all family members’ out-of-pocket expenses count toward meeting the deductible amount. Among covered workers in a plan with family coverage, the percentages of covered workers with an average aggregate general annual deductible are 24% for workers in HMOs, 50% for workers in PPOs, and 43% for workers in POS plans [Figure 7.20].
  • The average deductible amounts for covered workers with an aggregate deductible for family coverage are $2,732 for HMOs, $2,503 for PPOs, $2,697 for POS plans, and $4,527 for HDHP/SOs [Figure 7.21]. Deductible amounts for aggregate family deductibles are similar to last year for plan types other than PPOs.
• 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. About two-thirds of covered workers in plans with separate per-person family deductibles (68%) consider the deductible met for all family members if a prescribed number of family members each reaches his or her separate deductible amounts [Figure 7.24].²⁴ 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 deductibles are $1,045 for HMOs, $914 for PPOs, $1,128 for POS plans, and $2,645 for HDHP/SOs [Figure 7.21].
  • 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 [Figure 7.24]. Among those covered 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 (39%) [Figure 7.25].
• For covered workers in plans with an aggregate deductible for family coverage, the average annual family deductibles in small firms are higher than the average annual family deductibles in large firms across plan types [Figure 7.21].

CHARACTERISTICS OF GENERAL ANNUAL DEDUCTIBLES

• The majority of covered workers with a general annual 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 (74% in HMOs, 75% in PPOs, and 74% in POS plans) with general annual deductibles are enrolled in plans where the deductible does not have to be met before physician office visits for primary care are covered [Figure 7.27].
  • Similarly, among workers with a general annual deductible, large shares of covered workers in HMOs (96%), PPOs (92%), and POS plans (94%) are enrolled in plans where the general annual deductible does not have to be met before prescription drugs are covered [Figure 7.27].

HOSPITAL ADMISSIONS, OUTPATIENT SURGERY AND EMERGENCY ROOM VISITS

• Whether or not a worker has a general annual deductible, most workers face additional types of cost sharing (such as a copayment, coinsurance, or a per diem charge) when admitted to a hospital or having outpatient surgery. The distribution of workers with cost sharing for hospital admissions, outpatient surgery and emergency room visits does not equal 100% as workers may face a combination of types of cost sharing. In some cases, these cost-sharing arrangements are very complicated; for example workers visiting an emergency room may have some forms of cost-sharing waived if they are admitted to the hospital but still face other cost-sharing. In addition, the average copayment and coinsurance rates include workers who may have a combination of these types of cost sharing.
• Beginning this year, to reduce burden on respondents, we revised the survey to ask respondents about cost sharing for inpatient admissions, outpatient surgery and emergency room visits only in their largest health plan type; previously, we asked for this information for the largest plan for each of the plan types that they offered. After reviewing the responses and comparing them to prior years where we asked about each plan type, we find that the information we are receiving is quite similar to responses from previous years. For this reason, we will continue to report our results for these questions weighted by the number of covered workers in the responding firms. There is a more detailed discussion in the survey design and methods section on this topic.
• For hospital admissions, 64% of covered workers have coinsurance and 12% have copayments. Lower percentages of workers have per day (per diem) payments (10%), a separate hospital deductible (1%), or both a copayment and coinsurance (6%), while 17% have no additional cost sharing for hospital admissions after any general annual deductible has been met [Figure 7.28].
  • For covered workers in HMO plans, copayments are more common (38%) and coinsurance (28%) is less common than the average for all covered workers [Figure 7.28].
  • HDHP/SOs, on average, have a different cost-sharing structure than other plan types for hospital admissions. Only 1% of covered workers in HDHP/SOs have a copayment for hospital admissions, lower than the average for all covered workers [Figure 7.28].
  • The average coinsurance rate for a hospital admission is 19%, the average copayment is $336 per hospital admission, and the average per diem charge is $257 [Figure 7.32]. Ninety-three percent of workers enrolled in a plan with a per diem for hospital admissions have a limit on the number of days a worker must pay the amount [Figure 7.33].
• The cost-sharing provisions for outpatient surgery are similar to those for hospital admissions, as most workers have coinsurance or copayments. In 2017, 19% of covered workers have a copayment and 64% have coinsurance for outpatient surgery. In addition, 6% have both a copayment and coinsurance, while 16% have no additional cost sharing after any general annual deductible has been met [Figure 7.29].
  • For covered workers with cost sharing for outpatient surgery, the average coinsurance rate is 19% and the average copayment is $231 [Figure 7.32].
• The large majority of covered workers have cost sharing when they visit an emergency room. In 2017, 58% percent of covered workers have a copayment for emergency room visits and 32% have a coinsurance [Figure 7.30].
  • For covered workers with cost sharing for an emergency room visit, the average coinsurance rate is 20% and the average copayment is $180 [Figure 7.32].
  • Among covered workers in HDHP/SO plans, 21% have no cost sharing for an emergency room visit after any general annual deductible has been met, compared to 8% of covered workers in all plans [Figure 7.30].

Figure 7.29: Distribution of Covered Workers with Separate Cost Sharing for Outpatient Surgery, in Addition to Any General Annual Deductible, by Plan Type, 2017

Figure 7.30: Distribution of Covered Workers with Separate Cost Sharing for an Emergency Room Visit, in Addition to Any General Annual Deductible, by Plan Type, 2017

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.²⁵
  • The most common form of physician office visit cost sharing for in-network services is copayments. Seventy-one percent of covered workers have a copayment for a primary care physician office visit and 22% have coinsurance. For office visits with a specialty physician, 67% of covered workers have copayments and 26% have coinsurance [Figure 7.36].
  • Over the last five years, the percentage of covered workers with coinsurance for office visits with a specialist has risen from 19% to 26%.
  • Covered workers in HMOs, PPOs, and POS plans are much more likely to have copayments for both primary care and specialty care physician office visits than workers in HDHP/SOs. For primary care physician office visits, 62% of covered workers in HDHP/SOs have coinsurance, 18% have no cost sharing after the general annual plan deductible is met, and 18% have copayments [Figure 7.36].
  • Among covered workers with a copayment for in-network physician office visits, the average copayment is $25 for primary care and $38 for specialty physician office visits [Figure 7.37], similar to the amounts last year.
  • Among covered workers with coinsurance for in-network physician office visits, the average coinsurance rates are 19% for a visit with a primary care physician and 19% for a visit with a specialist [Figure 7.37], similar to the rates last year.

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 Affordable Care Act (ACA) requires that non-grandfathered health plans have an out-of-pocket maximum of $7,150 or less for single coverage and $14,300 for family coverage.²⁶ Many plans have complex out-of-pocket structures, which makes it difficult to accurately collect information on this element of plan design.
• In 2017, 98% percent of covered workers are in a plan with an out-of-pocket maximum for single coverage. This is a significant increase from 87% in 2012 [Figure 7.42].
• For covered workers in plans with out-of-pocket maximums for single coverage, there is wide variation in spending limits.
  • Fifteen percent of covered workers in plans with an out-of-pocket maximum for single coverage have an out-of-pocket maximum of less than $2,000, while 21% have an out-of-pocket maximum of $6,000 or more [Figure 7.44].

PERCENTAGE OF FIRMS OFFERING HDHP/HRAS AND HSA-QUALIFIED HDHPS

• Twenty-four percent of firms offering health benefits offer an HDHP/HRA, an HSA-qualified HDHP, or both. Among firms offering health benefits, 9% offer an HDHP/HRA and 17% offer an HSA-qualified HDHP [Figure 8.1]. The percentage of firms offering an HDHP/SO is similar to last year.
  • Large firms (200 or more workers) are more likely than small firms (3-199 workers) to offer an HDHP/SO (53% vs. 23%). [Figure 8.3].

ENROLLMENT IN FIRMS OFFERING HDHP/HRAS AND HSA-QUALIFIED HDHPS

• Enrollment in HDHP/SO plans has increased over the last five years, from 19% of covered workers in 2012 to 28% in 2017.
  • Nine percent of covered workers are enrolled in HDHP/HRAs and 19% of covered workers are enrolled in HSA-qualified HDHPs in 2017. These percentages are the same as the percentages last year [Figure 8.5].
  • A higher percentage of covered workers in large firms is enrolled in HDHP/SOs than in small firms (30% vs. 23%) [Figure 8.6].

PREMIUMS AND WORKER CONTRIBUTIONS

• The average annual premiums in 2017 for covered workers in HDHP/HRAs are $6,438 for single coverage and $18,948 for family coverage [Figure 8.7]. The average annual premium for single coverage in HDHP/HRAs is significantly less than the average annual premium for single coverage for covered workers in plans that are not HDHP/SOs [Figure 8.8].
• The average annual premium for workers in HSA-qualified HDHPs is $5,773 for single coverage and $16,821 for family coverage. These amounts are significantly less than the average single and family premium for covered workers in plans that are not HDHP/SOs [Figure 8.8].
• The average single and family coverage premiums for covered workers enrolled in HSA-qualified HDHPs are lower than the premiums for covered workers enrolled in HDHP/HRAs.
• The average annual worker contributions to premiums for workers enrolled in HDHP/HRAs are $1,216 for single coverage and $5,130 for family coverage [Figure 8.7].
• The average annual worker contributions to premiums for workers in HSA-qualified HDHPs are $918 for single coverage and $4,289 for family coverage. The average contributions for single and family coverage for covered workers in HSA-qualified HDHPs are significantly less than the average premium contribution made by covered workers in plans that are not HDHP/SOs [Figure 8.8].

PLAN DEDUCTIBLES

• As expected, workers enrolled in HDHP/SOs have higher deductibles than workers enrolled in HMOs, PPOs, or POS plans.
  • The average general annual deductible for single coverage is $2,129 for HDHP/HRAs and $2,433 for HSA-qualified HDHPs [Figure 8.14]. These averages are similar to the amounts reported in recent years. There is wide variation around these averages: 19% of covered workers enrolled in an HDHP/SO are in a plan with a deductible of $1,000 to $1,499 while 24% are in a plan with a deductible of $3,000 or more [Figure 8.13].
• The survey asks firms whether the family deductible amount is (1) an aggregate amount (i.e., the out-of-pocket expenses of all family members are counted until the deductible is satisfied), or (2) a per-person amount that applies to each family member (typically with a limit on the number of family members that would be required to meet the deductible amount) (see Section 7 for more information).
  • The average aggregate deductibles for workers with family coverage are $4,448 for HDHP/HRAs and $4,647 for HSA-qualified HDHPs [Figure 8.7]. As with single coverage, there is wide variation around these averages for family coverage: 18% of covered workers enrolled in HDHP/SOs with an aggregate family deductible have a deductible of $2,000 to $2,999 while 22% have a deductible of $6,000 dollars or more [Figure 8.15].

OUT-OF-POCKET MAXIMUM AMOUNTS

• HSA-qualified HDHPs are legally required to have an annual out-of-pocket maximum of no more than $6,550 for single coverage and $13,100 for family coverage in 2017. Non-grandfathered HDHP/HRA plans starting in 2017 are required to have out-of-pocket maximums of no more than $7,150 for single coverage and $14,300 for family coverage. Virtually all HDHP/HRA plans have an out of pocket maximum for single coverage in 2017.
  • The average annual out-of-pocket maximum for single coverage is $4,083 for HDHP/HRAs and $4,271 for HSA-qualified HDHPs [Figure 8.7].

EMPLOYER CONTRIBUTIONS TO PREMIUMS AND SAVINGS OPTIONS

• Employers contribute to HDHP/SOs in two ways: through their contributions toward the premium for the health plan and through their contributions (if any, in the case of HSAs) to the savings account option (i.e., the HRAs or HSAs themselves).
  • Looking at only the annual employer contributions to premiums, covered workers in HDHP/HRAs on average receive employer contributions of $5,222 for single coverage and $13,817 for family coverage [Figure 8.8]. These amounts are similar to the contribution amounts last year.
  • The average annual employer contributions to premiums for workers in HSA-qualified HDHPs are $4,855 for single coverage and $12,532 for family coverage, similar to the contribution amounts last year. The average employer contribution for covered workers in HSA-qualified HDHPs for single coverage is lower than the average contribution for covered workers in plans that are not HDHP/SOs [Figure 8.8].
• Looking at employer contributions to the savings options, covered workers enrolled in HDHP/HRAs on average receive an annual employer contribution to their HRA of $1,351 for single coverage and $2,444 for family coverage [Figure 8.8].
  • HRAs are generally structured in such a way that employers may not actually spend the whole amount that they make available to their employees’ HRAs.²⁹ Amounts committed to an employee’s HRA that are not used by the employee generally roll over and can be used in future years, but any balance may revert back to the employer if the employee leaves his or her job. Thus, the employer contribution amounts to HRAs that we capture in the survey may exceed the amount that employers will actually spend.
• Covered workers enrolled in HSA-qualified HDHPs on average receive an annual employer contribution to their HSA of $608 for single coverage and $1,086 for family coverage [Figure 8.8]. These amounts do not include the 3% of covered workers in HSA-qualified HDHPs whose employers say they vary account contributions based on certain factors, such as job classification or participation in a wellness program [Figure 8.18].
  • In many cases, employers that sponsor HSA-qualified HDHP/SOs do not make contributions to HSAs established by their employees. Forty-seven percent of employers offering single coverage and 46% offering family coverage through HSA-qualified HDHPs do not make contributions toward the HSAs that their workers establish. Twenty-three percent of workers with single coverage and 23% of workers with family coverage in an HSA-qualified HDHP do not receive an account contribution from their employer [Figures 8.16 and 8.17].
  • The average HSA contributions reported above include the portion of covered workers whose employer contribution to the HSA is zero. When those firms that do not contribute to the HSA are excluded from the calculation, the average employer contribution for covered workers is $795 for single coverage and $1,417 for family coverage.
  • The percentage of covered workers enrolled in a plan where the employer makes no HSA contribution for single and family coverage (23%) is similar to the percentage in recent years.
• Employer contributions to savings account options (i.e., the HRAs and HSAs themselves) for their workers can be added to their health plan premium contributions to calculate total employer contributions toward HDHP/SOs. We note that HRAs are a promise by an employer to pay up to a specified amount and that many employees will not receive the full amount of their HRA in a year, so adding the employer premium contribution amount and the HRA contribution represents an upper bound for employer liability that overstates the amount that is actually expended. Since employer contributions to employee HSA accounts immediately transfer the full amount to the employee, adding employer premium and HSA contributions is a good way to look at their total liability under these plans.
  • For HDHP/HRAs, the average annual total employer contribution for covered workers is $6,573 for single coverage and $16,261 for family coverage. The average total employer contribution amounts for covered workers for single coverage and family coverage in HDHP/HRAs are higher than the average amount that employers contribute toward family coverage in health plans that are not HDHP/SOs [Figure 8.8].
  • For HSA-qualified HDHPs, the average total annual firm contribution for covered workers is $5,473 for single coverage and $13,608 for workers with family coverage. The average total firm contribution amounts for single and family coverage in HSA-qualified HDHPs are similar to the average firm contributions toward single and family coverage in health plans that are not HDHP/SOs [Figure 8.8].
• There is considerable variation in the amount that employers contribute to savings accounts.
  • Forty-six percent of covered workers in an HDHP/HRA have an annual HRA contribution of less than $800, while 22% have an annual HRA contribution of $1,600 or more.
  • Thirty-seven percent of covered workers in an HSA-qualified HDHP have an annual HSA contribution of less than $400, including 23% that have no HSA contribution from their employer. In contrast, 12% of covered workers in an HSA-qualified HDHP have an annual HSA contribution of $1,200 or more. These percentages do not include the 3% of covered workers with an employer that matches their HSA contribution.

COST-SHARING FOR OFFICE-VISITS

• The cost-sharing pattern for primary care office visits differs for workers enrolled in HDHP/SOs. Thirty-nine percent of covered workers in HDHP/HRAs have a copayment for primary care physician office visits compared to 7% enrolled in an HSA-qualified HDHP [Figure 8.22]. Workers in other plan types are much more likely to face copayments than coinsurance for physician office visits (see Section 7 for more information).

Health Reimbursement Arrangements (HRAs)

are medical care reimbursement plans established by employers that can be used by employees to pay for health care. HRAs are funded solely by employers. Employers may commit to make a specified amount of money available in the HRA for premiums and medical expenses incurred by employees or their dependents. HRAs are accounting devices, and employers are not required to expend funds until an employee incurs expenses that would be covered by the HRA. Unspent funds in the HRA usually can be carried over to the next year (sometimes with a limit). Employees cannot take their HRA balances with them if they leave their job, although an employer can choose to make the remaining balance available to former employees to pay for health care. HRAs often are offered along with a high-deductible health plan (HDHP). In such cases, the employee pays for health care first from his or her HRA and then out-of-pocket until the health plan deductible is met. Sometimes certain preventive services or other services such as prescription drugs are paid for by the plan before the employee meets the deductible.

Health Savings Accounts (HSAs)

are savings accounts created by individuals to pay for health care. An individual may establish an HSA if he or she is covered by a “qualified health plan” –a plan with a high deductible (i.e., a deductible of at least $1,300 for single coverage and $2,600 for family coverage in 2017) that also meets other requirements. Employers can encourage their employees to create HSAs by offering an HDHP that meets the federal requirements. Employers in some cases also may assist their employees by identifying HSA options, facilitating applications, or negotiating favorable fees from HSA vendors. Both employers and employees can contribute to an HSA, up to the statutory cap of $3,400 for single coverage and $6,750 for family coverage in 2017. Employee contributions to the HSA are made on a pre-income tax basis, and some employers arrange for their employees to fund their HSAs through payroll deductions. Employers are not required to contribute to HSAs established by their employees but if they elect to do so, their contributions are not taxable to the employee. Interest and other earnings on amounts in an HSA are not taxable. Withdrawals from the HSA by the account owner to pay for qualified health care expenses are not taxed. The savings account is owned by the individual who creates the account, so employees retain their HSA balances if they leave their job.³⁰

DISTRIBUTION OF COST-SHARING

• A large share of covered workers (91%) are in a plan with a tiered cost-sharing formula for prescription drugs [Figure 9.1]. Cost-sharing tiers generally refer to a health plan placing a drug on a formulary or preferred drug list that classifies drugs into categories that are subject to different cost sharing or management. It is common for there to be different tiers for generic, preferred and non-preferred drugs. In recent years, plans have created additional tiers which, for example, may be used for lifestyle drugs or expensive biologics. Some plans may have multiple tiers for different categories; for example, a plan may have preferred and non-preferred specialty tiers. The survey obtains information about the cost-sharing structure for up to five tiers.
• Eighty-three percent of covered workers are in a plan with three, four, or more tiers of cost sharing for prescription drugs [Figure 9.1]. These totals include tiers that cover only specialty drugs, even though the cost-sharing information for those tiers is reported separately.
  • HDHP/SOs have a different cost-sharing pattern for prescription drugs than other plan types. Covered workers in HDHP/SOs are more likely to be in a plan with the same cost sharing regardless of drug type (15% vs. 2%) or in a plan that has no cost sharing for prescriptions once the plan deductible is met (13% vs. <1%) as compared to covered workers in other types of plans [Figure 9.2].

AVERAGE COST-SHARING NOT INCLUDING TIERS EXCLUSIVELY COVERING SPECIALTY DRUGS

• Even when formulary tiers covering only specialty drugs are not included, a large share (77%) of covered workers are in a plan with three or more tiers of cost sharing for prescription drugs. The cost-sharing statistics presented in this section do not include information about tiers that cover only specialty drugs. In cases in which a plan covers specialty drugs on a tier with other drugs, they will still be included in these averages. Cost-sharing statistics for tiers covering only specialty drugs are presented in the next section.
• For covered workers in a plan with three or more tiers of cost sharing for prescription drugs, copayments are the most common form of cost sharing in the first three tiers and coinsurance is the next most common. Among those with a fourth tier, the difference between the percentage with a copayment and a coinsurance requirement is not statistically significant [Figure 9.3].
  • Among covered workers in plans with three or more tiers of cost sharing for prescription drugs, the average copayments are $11 for first-tier drugs, $33 second-tier drugs, $59 for third-tier drugs, and $110 for fourth-tier drugs [Figure 9.6].
  • Among covered workers in plans with three or more tiers of cost sharing for prescription drugs, the average coinsurance rates are 17% for first-tier drugs, 25% second-tier drugs, 38% third-tier drugs, and 28% for fourth-tier drugs [Figure 9.6].
• Eleven percent of covered workers are in a plan with two tiers for prescription drug cost sharing (excluding tiers covering only specialty drugs).
  • For these workers, copayments are more common than coinsurance for both first-tier and second-tier drugs. The average copayment for the first tier is $11 and the average copayment for the second tier is $30 [Figure 9.3].
• Seven percent of covered workers are in a plan with the same cost sharing for prescriptions regardless of the type of drug (excluding tiers covering only specialty drugs).
  • Among these workers, 21% have copayments and 79% have coinsurance [Figure 9.3]. The average coinsurance rate is 19% and the average copayment is $11 [Figure 9.7].
  • Twenty-one percent of these workers are in a plan that limits coverage for prescriptions to generic drugs [Figure 9.9].
• Coinsurance rates for prescription drugs often have maximum and/or minimum dollar amounts associated with the coinsurance rate. Depending on the plan design, coinsurance maximums may significantly limit the amount an enrollee must spend out-of-pocket for higher cost drugs.
• These coinsurance minimum and maximum amounts vary across the tiers.
  • For example, among covered workers in a plan with coinsurance for the first cost-sharing tier, 25% have only a maximum dollar amount attached to the coinsurance rate, 8% have only a minimum dollar amount, 18% have both a minimum and maximum dollar amount, and 49% have neither. For those in a plan with coinsurance for the fourth cost-sharing tier, 52% have only a maximum dollar amount attached to the coinsurance rate, 4% have only a minimum dollar amount, 12% have both a minimum and maximum dollar amount, and 33% have neither. [Figure 9.8].

SPECIALTY DRUGS

• Specialty drugs, such as biologics that may be used to treat chronic conditions or some cancer drugs, can be quite expensive and often require special handling and administration. We revised our questions beginning with the 2016 survey to obtain more information about formulary tiers that are exclusively for specialty drugs. We are reporting results only among large firms because a substantial share of small firms were unsure whether their largest plan covered these drugs.
  • Ninety-seven percent of covered workers at large firms have coverage for specialty drugs [Figure 9.10]. Among these workers, 47% are in a plan with at least one cost-sharing tier just for specialty drugs [Figure 9.11].
  • Among covered workers in a plan with a separate tier for specialty drugs, 45% have a copayment for specialty drugs and 46% have a coinsurance [Figure 9.12]. The average copayment is $101 and the average coinsurance rate is 27% [Figure 9.13]. Eighty percent of those with a coinsurance have a maximum dollar limit on the amount of coinsurance they must pay.
• Some covered workers are also required to meet a deductible before the plan covers specialty drugs. Among covered workers enrolled in a plan with a deductible and specialty drug coverage, 29% must meet the general annual deductible and 15% must meet a separate drug deductible before specialty drugs are covered [Figure 9.14].

SEPARATE ANNUAL DRUG DEDUCTIBLES

• In addition to other cost sharing, some covered workers are also required to meet a separate prescription drug deductible before the plan covers some or all drugs. Fifteen percent of covered workers are in a plan with a separate annual deductible for prescription drugs [Figure 9.15]. These prescription drug deductibles are separate from any general annual deductible and may apply to all or a select number of tiers.
  • For 57% of covered workers in firms with a separate deductible for prescription drugs, the deductible applies to all drugs on each of the formulary tiers [Figure 9.16].
  • The average annual deductible among covered workers in firms who face a separate annual deductible is $149 [Figure 9.16].

Generic drugs

Drugs that are no longer covered by patent protection and thus may be produced and/or distributed by multiple drug companies.

Preferred drugs

Drugs included on a formulary or preferred drug list; for example, a brand-name drug without a generic substitute.

Non-preferred drugs

Drugs not included on a formulary or preferred drug list; for example, a brand-name drug with a generic substitute.

Fourth-tier drugs

New types of cost-sharing arrangements that typically build additional layers of higher copayments or coinsurance for specifically identified types of drugs, such as lifestyle drugs or biologics.

Specialty drugs

Specialty drugs such as biological drugs are high cost drugs that may be used to treat chronic conditions such as blood disorder, arthritis or cancer. Often times they require special handling and may be administered through injection or infusion.

STOPLOSS COVERAGE AND ATTACHMENT POINTS

• Fifty-eight percent of covered workers in self-funded health plans are in plans that have stoploss insurance [Figure 10.7]. Stoploss coverage may limit the amount of claims that must be paid for each worker or may limit the total amount the plan sponsor must pay for all claims over the plan year.
  • The percentage of covered workers in self-funded plans with stoploss insurance (58%) is similar to the value when the survey first asked about stoploss insurance in 2011 (58%).
  • Eighty-eight percent of covered workers in self-funded plans that have stoploss protection are in plans where the stoploss insurance limits the amount that the plan must spend on each worker. This includes stoploss insurance plans that limit a firm’s per-employee spending and plans that limit both a firm’s overall spending and per-employee spending [Figure 10.8].
  • Firms with per-enrollee stoploss coverage were asked for the dollar amount where the stoploss coverage would start to pay for most or all of the claim (called an attachment point). The average attachment point in small firms is $80,000. For large firms with a per-person limit, the average attachment point is $340,000 [Figure 10.8].

Self-Funded Plan

An insurance arrangement in which the employer assumes direct financial responsibility for the costs of enrollees’ medical claims. Employers sponsoring self-funded plans typically contract with a third-party administrator or insurer to provide administrative services for the self-funded plan. In some cases, the employer may buy stoploss coverage from an insurer to protect the employer against very large claims.

Fully Insured Plan

An insurance arrangement in which the employer contracts with a health plan that assumes financial responsibility for the costs of enrollees’ medical claims.

EMPLOYER RETIREE BENEFITS

• In 2017, 25% of large firms that offer health benefits to their workers offer retiree coverage, similar to recent years [Figure 11.1]. However, there has been a downward trend in the percentage of firms offering retirees coverage, from 32% in 2007 and 40% in 1999.
• Retiree health benefits offer rates vary considerably by firm characteristics.
  • Among large firms offering health benefits, firms with 200-999 workers are less likely to offer retiree health benefits than firms with 1,000 or more workers (23% vs. 36%) [Figure 11.2].
  • The share of large firms offering retiree health benefits varies considerably by industry. State and local governments (73%) and transportation/communication/utilities industries (47%) have higher than average offer rates, while retail (5%) and health care (8%) have lower than average offer rates [Figure 11.2].
  • Among large firms offering health benefits, the share of public firms offering retiree benefits (67%) is higher than the shares of private for-profit firms (11%) or private not-for-profit firms (19%) offering retiree benefits [Figure 11.3].
  • Large firms with at least some union workers are more likely to offer retiree health benefits than large firms without any union workers (45% vs. 18%) [Figure 11.3].
• Twenty-six percent of large firms offering retiree benefits contribute to those benefits through a contract with a Medicare Advantage plan. Firms with 1,000-4,999 workers are more likely to contribute to retiree benefits through a contract with a Medicare Advantage plan than other large firms (44% vs. 21%) [Figure 11.4].

EARLY RETIREES AND MEDICARE-AGE RETIREES

• Among large firms offering retiree health benefits, most firms offer to early retirees under the age of 65 (95%). A lower percentage (66%) of large firms offering retiree health benefits offer to Medicare-age retirees. These percentages are similar to those in recent years [Figure 11.5].
• Among all large firms offering retiree health benefits, 61% offer health benefits to both early and Medicare-age retirees.

PRIVATE EXCHANGES

• Private exchanges have received considerable attention over the last several years. They are typically created by a consulting company, broker, or insurer, and are different than the public exchanges created under the Affordable Care Act (ACA). Private exchanges allow employees or retirees from multiple companies to choose from a larger number of health benefit options than one firm would generally provide. Twelve percent of large firms offering retiree health benefits report they offer benefits through a private exchange, similar to the percentage last year (6%) [Figure 11.7]. For more information on the use of private exchanges for active employees, please see Section 14.
• Thirty percent of large firms offering retiree benefits make a defined contribution for retiree health benefits [Figure 11.7]. A defined contribution is a set dollar amount that the retiree can use to purchase a retiree health plan they choose.

HEALTH RISK ASSESSMENTS

Some firms provide workers the opportunity to complete a health risk assessment to identify potential health issues. Health risk assessments generally include questions about medical history, health status, and lifestyle. At small firms, health risk assessments are typically administered by an insurer.

• Among firms offering health benefits, 38% of small firms and 62% of large firms provide workers the opportunity to complete a health risk assessment [Figure 12.1]. These percentages are similar to the corresponding percentages for 2016 (32% for small firms and 59% for large firms) [Figure 12.2].
  • Seventy-eight percent of firms offering health benefits with 5,000 or more workers provide workers the opportunity to complete a health risk assessment, similar to the percentage for 2016 (74%) [Figure 12.1].
• In firms providing workers the opportunity to complete a health risk assessment, 42% of covered workers complete an assessment, similar to the percentage in 2016 [Figure 12.3].
  • There is considerable variation across firms in the percentage of workers who complete the assessment. Nineteen percent of large firms providing workers the opportunity to complete a health risk assessment report that more than 75% of their workers complete the assessment, while 45% report no more than 25% of workers complete the assessment.
• Some firms offer incentives to encourage workers to complete a health risk assessment.
  • Among large firms that offer a health risk assessment, 52% offer workers an incentive to complete the assessment [Figure 12.4].
  • Among large firms offering incentives for workers to complete a health risk assessment, 46% lower premium contributions or reduce cost sharing and 40% offer cash, HSA or HRA contributions, or allow the worker to avoid a payroll deduction [Figure 12.5]. In some firms, workers must complete the assessment to be eligible for other rewards under the firm’s wellness programs. Some firms offer workers more than one type of incentive.

BIOMETRIC SCREENING

Biometric screening is a health examination that measures a person’s risk factors (such as cholesterol, blood pressure, and body mass index (BMI)) for certain medical issues. A biometric outcome involves assessing whether an enrollee meets specified health targets related to certain risk factors, such as meeting a target BMI or cholesterol level. As defined by this survey, goals related to smoking are not included in the biometric screening questions.

• Among firms offering health benefits, 21% of small firms and 52% of large firms provide workers the opportunity to complete a biometric screening [Figure 12.6]. These percentages are similar to 2016 (20% and 53%) [Figure 12.7].
• In firms providing workers the opportunity to complete a biometric screening, 41% of covered workers complete a screening [Figure 12.8].
  • There is considerable variation across firms in the percentage of workers who complete a biometric screening. Twenty-two percent of large firms providing workers the opportunity to complete a biometric screening report that more than 75% of their workers complete the screening, while 26% report no more than 25% of workers complete the screening.
• Firms that provide workers the opportunity to complete a biometric screening may include additional incentives for those workers who do so.
  • Among large firms with biometric screening programs, 53% offer workers an incentive to complete the screening [Figure 12.10]. The likelihood of a firm with a biometric screening program offering an incentive to complete a biometric screening increases with firm size [Figure 12.10]. Some firms report offering more than one type of incentive.
  • Among large firms with an incentive for workers to complete a biometric screening, 49% lower premium contributions or reduce cost sharing and 33% offer cash, HRA or HSA contributions, or allow the worker to avoid a payroll deduction. As with incentives for health risk assessments, workers in some firms must complete the biometric screening to be eligible for other rewards under the firm’s wellness programs [Figure 12.11].
• In addition to incentives for completing a biometric screening, some firms offer workers incentives to meet biometric outcomes. Among large firms with biometric screening programs, 14% reward or penalize workers based on achieving specified biometric outcomes (such as meeting a target BMI) [Figure 12.10].
  • The size of the incentives firms offer for meeting biometric outcomes varies considerably. Among large firms offering a reward or penalty for meeting biometric outcomes, the maximum reward is valued at $150 or less for 9% of firms and more than $1,000 for 17% of firms [Figure 12.12]. Twenty-three percent of these firms combine the reward with incentives for other activities.

ADMINISTRATION OF HEALTH SCREENING PROGRAMS

Among firms offering health benefits, 44% of small firms and 69% of large firms offer workers a health risk assessment, biometric screening or both screening programs. The scope and administration of screening programs vary considerably across firms, and some firms use different administrators for different programs.

• Among firms that offer a health screening program, an insurer or third-party administrator administers some health screening programs at 87% of firms, third party vendors, such as wellness providers, administer some screening programs at 29% of firms, and the firm itself administers some health screening programs at 9% of firms [Figure 12.13].
• Thirty-seven percent of large firms offering health benefits have an incentive for workers to complete biometric screening or a health risk assessment. Among large firms with an incentive for either health screening program, 34% have incentives for workers not enrolled in the health plan and 49% have incentives for spouses enrolled as dependents in the plan [Figure 12.14].
• Among firms offering health benefits, 8% of small firms and 14% of large firms collect information from workers’ wearable devices, such as a Fitbit or Apple Watch, as part of their wellness or health promotion program [Figure 12.15].

WELLNESS AND HEALTH PROMOTION PROGRAMS

Many firms and health plans offer programs to help workers engage in healthy lifestyles and reduce health risks. Wellness and health promotion programs may include exercise programs, health education classes, and stress-management counseling. These programs may be offered directly by the firm, an insurer, or a third-party contractor.

• Among firms offering health benefits, 40% of small firms and 72% of large firms offer programs to help workers stop smoking, 34% of small firms and 67% of large firms offer programs to help workers lose weight, and 47% of small firms and 72% of large firms offer some other lifestyle or behavioral coaching program. Fifty-eight percent of small firms and 85% of large firms offering health benefits offer at least one of these three programs [Figures 12.16 and 12.17].
• To encourage participation in wellness programs, firms may offer incentives to workers who participate in or complete wellness programs.
  • Thirty-two percent of large firms offering one of these wellness or health promotion programs offer an incentive to encourage workers to participate in or complete the programs [Figure 12.18]. Forty-six percent of firms with more than 5,000 workers offering one of these wellness or health promotion programs offer an incentive to participate in or complete the programs.
  • Among large firms offering incentives to workers to participate in or complete wellness or health promotion programs, 19% lower premium contributions or reduce cost sharing and 37% offer cash , HSA or HRA contributions, or allow the worker to avoid a payroll deduction [Figure 12.19].
• Firms with incentives for health risk assessments, biometric screening, or wellness or health promotion programs were asked to report the maximum reward or penalty a worker could earn for all of the firm’s health promotion activities combined. Some firms do not offer incentives for individual activities, but offer rewards to workers who complete a variety of activities. Among large firms offering incentives for any of these programs, the maximum value for all wellness-related incentives is $150 or less in 25% of firms and more than $1,000 in 19% of firms [Figure 12.20].
• Firms with incentives for health risk assessments, biometric screening, or wellness or health promotion programs were also asked how effective they believed incentives were for encouraging participation. Thirty-four percent of large firms offering incentives for any one of these programs said the incentives are “very effective” at encouraging workers to participate and 58% said the incentives are “somewhat effective”, while 7% said the incentives are “not at all effective” [Figure 12.21].
• Firms offering a health screening program or a wellness program use a variety of metrics to evaluate their health promotion programs, including participation, employee satisfaction, and return on investment [Figure 12.23].

DISEASE MANAGEMENT

Disease management programs aim to improve health and reduce costs for enrollees with chronic illnesses by educating them about their disease and suggesting treatment options. These programs can help enrollees with conditions such as diabetes, asthma, hypertension, and high cholesterol.

• Forty-one percent of firms that offer health benefits offer disease management programs. Large firms are more likely than small firms to offer disease management programs (68% vs. 40%) [Figure 12.24].
• Nine percent of large firms that offer disease management programs offer incentives for workers to participate in or complete the programs. This percentage is highest among firms with 5,000 or more workers (26%) [Figure 12.26].

PENALTIES FOR TOBACCO USE

• Among firms offering health benefits, 16% of small firms and 14% of large firms, including 49% of firms with 5,000 or more workers, require higher premium contributions or cost sharing from workers who use tobacco [Figure 12.27]. Some firms noted that not smoking is a condition of employment.
• Among firms with higher costs for workers who use tobacco, virtually all firms rely on self-reporting, including through a health risk assessment, to determine whether a worker uses tobacco [Figure 12.28].
• Among large firms with higher costs for workers who use tobacco, 56% indicate that dependents also have higher premium contributions or cost sharing if they use tobacco [Figure 12.29].

SHOPPING FOR HEALTH COVERAGE

Fifty-nine percent of firms offering health benefits reported shopping for a new health plan or a new insurance carrier in the past year, similar to the percentage last year. Small firms (3-199 workers) were more likely to shop for coverage (59%), and firms with 1,000-4,999 workers and firms with 5,000 or more workers were less likely to shop for coverage (36% and 24%, respectively) than firms in other size categories [Figure 14.1].

• Among firms that offer health benefits and who shopped for a new plan or carrier in the past year, 28% changed insurance carriers [Figure 14.2].
• Eighty-eight percent of firms offering health benefits used a broker or consultant to assist in choosing a health plan [Figure 14.3].

PROVIDER NETWORKS

Firms and health plans can structure their networks of providers and their cost sharing to encourage enrollees to use providers who are lower cost or who provide better care. A tiered or high-performance network groups providers in the network based on the cost, quality and/or efficiency of the care they deliver. These networks encourage enrollees to visit preferred doctors by either restricting networks to efficient providers, or by having different cost sharing requirements based on the provider’s tier.

• Twelve percent of firms with 50 or more workers that offer health benefits include a high-performance or tiered provider network in their health plan with the largest enrollment, a similar percentage to last year [Figures 14.6 and 14.7].
• Firms with 1,000-4,999 workers (23%) and firms with 5,000 or more workers (31%) are more likely to incorporate a high-performance or tiered network into their largest plan [Figure 14.6].
• Eight percent of firms offering health benefits report that they offer a plan that they considered to be a narrow network plan, similar to the percentage reported last year [Figures 14.4]. Narrow network plans limit the number of providers who can participate in order to reduce costs. Narrow network plans are generally more restrictive than standard HMO networks.
  • Firms with 5,000 or more workers offering health benefits are more likely to offer at least one plan with a narrow network than firms of other sizes [Figure 14.4].
• Six percent of firms offering health benefits said that either they or their insurer eliminated a hospital or health system from a provider network in order to reduce the plan’s cost during the last year [Figure 14.4].

ALTERNATIVE CARE SETTINGS: TELEMEDICINE AND RETAIL CLINICS

Firms and health plans are incorporating new sites and methods of care in order to improve convenience and potentially reduce costs.

• Fifty-three percent of firms with 50 or more workers who offer health benefits cover the provision of some health care services through telemedicine in their largest health plan [Figure 14.8]. Telemedicine is the delivery of health care services through telecommunications to a patient from a provider who is at a remote location, including video chat and remote monitoring. This would not include the mere exchange of information via email, exclusively web-based resources, or online information a plan may make available unless a health professional provides information specific to the enrollee’s condition. Larger firms are more likely to cover services provided through telemedicine than smaller firms [Figure 14.8].
  • Among firms with 50 or more workers whose plans cover health services through telemedicine, 26% provide a financial incentive for workers to use telemedicine instead of visiting a traditional physician’s office in-person [Figure 14.9].
  • The percentage of large firms reporting that they cover services through telemedicine rose significantly in the last year, from 39% last year to 63% this year [Figure 14.10]. We note that we made a small change to the survey question, which could account for some of that change. This is a significant increase in one year, and we will examine this next year to see if the higher prevalence persists.
• Seventy-five percent of firms that offer health benefits cover care received in retail clinics, such as those located in pharmacies, supermarkets and retail stores, in their largest health plan [Figure 14.11]. These clinics are often staffed by nurse practitioners or physician assistants and treat minor illnesses and provide preventive services.
  • The percentage of firms covering care received in retail clinics in their largest health plan increased in the last year [Figure 14.12].
  • Fifteen percent of firms that cover care at retail clinics provide a financial incentive for workers to visit a retail clinic instead of a traditional physician’s office [Figure 14.11].
• Seventy-three percent of firms that offer health benefits include a nurse hotline in their largest health plan. This is a significant increase from 55% in 2013 [Figure 14.13].

PRIVATE EXCHANGES AND DEFINED CONTRIBUTIONS

A private exchange is a virtual market that allows employers to provide their workers with a choice of several different health benefit options, often including supplemental or ancillary benefits options. Private exchanges generally are created by consulting firms, insurers, or brokers, and are different than the public exchanges run by the states or the federal government. There is considerable variation in the types of exchanges currently offered: some exchanges allow workers to choose between multiple plans offered by the same carrier while in other cases multiple carriers participate. The exchange operator may establish standards for the plans offered and may negotiate with insurers over the price and services provided. Although there has been considerable attention to the potential of private exchanges to change the market for employer-based coverage, participation thus far has been quite modest.

• Four percent of firms offering health benefits with 50 or more workers offer coverage through a private exchange. These firms provide coverage to 2% of covered workers in firms with 50 or more workers [Figure 14.16]. These percentages are the same as those in 2016.
• Firms offering health benefits with 50 or more workers that do not already offer health benefits through a private exchange were asked whether they had considered offering coverage through a private exchange. Ten percent of these firms are considering such an approach, lower than the percentage last year (18%) [Figure 14.15].

Some firms use a defined contribution approach to contribute toward the cost of health insurance. A defined contribution is a set dollar amount offered to the worker by the employer. Workers may then select one of several plans, paying the difference between the defined contribution and the cost of their chosen health insurance plan. This allows a firm to offer a larger variety of health plans to workers and to structure contributions or other rules to encourage workers to choose more efficient plans. Some private exchanges encourage employers to use a defined contribution approach to encourage competition among the participating insurers.

• Firms offering health benefits with 50 or more workers and that do not already offer benefits through a private exchange were asked whether they had considered using a defined contribution approach. Nineteen percent of these firms were considering such an approach [Figure 14.15].

ASSOCIATION HEALTH PLANS AND MEDICAID

• An association health plan is an organization of employers that coordinates coverage in order to reduce costs or improve benefits. Six percent of offering firms with fewer than 250 workers offer health benefits through a trade or professional association health plan [Figure 14.17].
• A substantial share of firms that offer health benefits report having workers who receive coverage from Medicaid. Medicaid is a federally and state-funded program that provides health coverage for people who are poor, aged or disabled. Twenty percent of small firms and 48% of large firms report that they have workers covered by Medicaid. We note that, as expected, there is a significant share of firms, particularly larger firms, that do not know the answer to this question [Figure 14.18].