2023 Employer Health Benefits Survey
Section 8: High-Deductible Health Plans with Savings Option
To help cover out-of-pocket expenses not covered by a health plan, some firms offer high-deductible plans paired with an account that allows enrollees to use tax-preferred funds to pay plan cost sharing and other out-of-pocket medical expenses. The two most common types of accounts are health reimbursement arrangements (HRAs) and health savings accounts (HSAs). HRAs and HSAs are both financial accounts that workers or their family members can use to pay for health care services. These savings arrangements are often (or, in the case of HSAs, always) paired with health plans with high deductibles. This survey treats high-deductible plans paired with a savings option as a distinct plan type – High-Deductible Health Plan with Savings Option (HDHP/SO) – even if the plan would otherwise be considered a PPO, HMO, POS plan, or conventional health plan. Specifically for the survey, HDHP/SOs are defined as (1) health plans with a deductible of at least $1,000 for single coverage and $2,000 for family coverage18, offered with an HRA (referred to as HDHP/HRAs), or (2) high-deductible health plans that meet the federal legal requirements to permit an enrollee to establish and contribute to an HSA (referred to as HSA-qualified HDHPs).19
PERCENTAGE OF FIRMS OFFERING HDHP/HRAS AND HSA-QUALIFIED HDHPS
- Thirty percent of firms offering health benefits offer an HDHP/HRA, an HSA-qualified HDHP, or both. Among firms offering health benefits, 8% offer an HDHP/HRA and 24% 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 much likely to offer an HDHP/SO than small firms (3-199 workers) (57% vs. 29%) [Figure 8.3].
ENROLLMENT IN HDHP/HRAS AND HSA-QUALIFIED HDHPS
- Twenty-nine percent of covered workers are enrolled in an HDHP/SO in 2023, similar to the percentage last year (29%) [Figure 8.4].
- Enrollment in HDHP/SOs has increased over the past decade, from 20% of covered workers in 2013 to 29% in 2023 [Figure 8.4].
OUT-OF-POCKET MAXIMUMS AND PLAN DEDUCTIBLES
- HSA-qualified HDHPs are legally required to have an annual out-of-pocket maximum of no more than $7,500 for single coverage and $15,000 for family coverage in 2023. Non-grandfathered HDHP/HRA plans are required to have out-of-pocket maximums of no more than $9,100 for single coverage and $18,200 for family coverage. Virtually all HDHP/HRA plans have an out-of-pocket maximum for single coverage in 2023.
- The average annual out-of-pocket maximum for single coverage is $5,456 for HDHP/HRAs and $4,415 for HSA-qualified HDHPs [Figure 8.6].
- As expected, workers enrolled in HDHP/SOs have higher deductibles than workers enrolled in HMOs, PPOs, or POS plans [Figure 8.14].
- The average general annual deductible for single coverage is $2,944 for HDHP/HRAs and $2,518 for HSA-qualified HDHPs [Figure 8.6]. There is wide variation around these averages: 36% of covered workers enrolled in an HDHP/SO are in a plan with a deductible between $1,000 and $1,999 for single coverage while 33% have a deductible of $3,000 or more [Figure 8.12].
- 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 $6,080 for HDHP/HRAs and $4,674 for HSA-qualified HDHPs [Figure 8.6]. As with single coverage, there is wide variation around these averages for family coverage: 2% of covered workers enrolled in HDHP/SOs with an aggregate family deductible have a deductible between $2,000 and $2,999 while 25% have a deductible of $6,000 dollars or more [Figure 8.15].
EMPLOYER ACCOUNT CONTRIBUTIONS
- 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 (the HRAs or HSAs themselves).
- Covered workers in HDHP/HRAs receive premium contributions from their employers of $6,797 on average for single coverage and $16,547 for family coverage [Figure 8.7]. These amounts are similar to the contribution amounts last year.
- The average annual employer contribution to premiums for workers in HSA-qualified HDHPs is $6,526 for single coverage and $17,205 for family coverage. The contribution for single coverage is higher than the amount last year ($6,526 vs. $6,092). The average employer contribution for single coverage for workers in HSA-qualified HDHPs is lower than for workers in plans that are not HDHP/SOs [Figure 8.7].
- Covered workers enrolled in HDHP/HRAs on average receive an annual employer contribution to their HRA of $1,618 for single coverage and $2,906 for family coverage [Figure 8.7].
- 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.20 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 receive an average annual employer HSA contribution of $657 for single coverage and $1,203 for family coverage [Figure 8.7].
- In many cases, employers that sponsor HSA-qualified HDHP/SOs do not make contributions to HSAs established by their employees. Thirty-eight percent of employers offering single coverage and 41% offering family coverage through HSA-qualified HDHPs do not make contributions toward the HSAs that their workers establish. Among covered workers enrolled in an HSA-qualified HDHP, 17% enrolled in single coverage and 18% enrolled in family coverage do not receive an account contribution from their employer [Figure 8.16] and [Figure 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 $791 for single coverage and $1,471 for family coverage.
- The percentages of covered workers enrolled in a plan where the employer makes no HSA contribution, (17% for single coverage and 18% for family coverage), are similar to the percentages in recent years [Figure 8.16] and [Figure 8.17].
- The amount that employers contribute to savings accounts varies considerably.
- Twenty-five percent of covered workers in an HDHP/HRA receive an annual HRA contribution of less than $800 for single coverage, while 31% receive an annual HRA contribution of $1,600 or more [Figure 8.16].
- Twenty-nine percent of covered workers in an HSA-qualified HDHP receive an annual HSA contribution of less than $400 for single coverage, including 17% who receive no HSA contribution from their employer [Figure 8.16]. In contrast, 14% of covered workers in an HSA-qualified HDHP receive an annual HSA contribution of $1,200 or more. One percent of covered workers have an employer that matches any HSA contribution for single coverage.
- 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 HSAs immediately transfer the full amount to the employee, adding employer premium and HSA contributions is an instructive way to look at their total liability under these plans.
- For HDHP/HRAs, the average annual total employer contribution for covered workers is $8,415 for single coverage and $19,453 for family coverage. The average total employer contributions for covered workers for single coverage and family coverage in HDHP/HRAs are higher than the average employer contributions toward single and family coverage in plans that are not HDHP/SOs [Figure 8.7].
- For HSA-qualified HDHPs, the average total annual employer contribution for covered workers is $7,175 for single coverage and $18,398 for workers with family coverage. These amounts are similar to the average employer contributions for single and family coverage in health plans that are not HDHP/SOs [Figure 8.7].
COST SHARING FOR OFFICE VISITS
- The cost-sharing pattern for primary care office visits varies for workers enrolled in HDHP/SOs. Sixty-six percent of covered workers in HDHP/HRAs have a copayment for primary care physician office visits, compared to 9% enrolled in HSA-qualified HDHPs [Figure 8.20]. 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 (at least $1,400 for single coverage and $2,800 for family coverage in 2023 or $1,400 and $2,800, respectively, in 2022) 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 $3,850 for single coverage and $7,750 for family coverage in 2023. 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. See https://www.federalregister.gov/d/2019-08017/p-850 For those enrolled in an HDHP/HSA, see https://www.irs.gov/pub/irs-pdf/p969.pdf.
- There is no legal requirement for the minimum deductible in a plan offered with an HRA. The survey defines a high-deductible HRA plan as a plan with a deductible of at least $1,000 for single coverage and $2,000 for family coverage. Federal law requires a deductible of at least $1,400 for single coverage and $2,800 for family coverage for HSA-qualified HDHPs in 2023 (or $1,400 and $2,800, respectively, for plans in their 2022 plan year). Not all firms’ plan years correspond with the calendar year, so some firms may report a plan with limits from the prior year. See definitions at the end of this Section for more information on HDHP/HRAs and HSA-qualified HDHPs.↩︎
- The definitions of HDHP/SOs do not include other consumer-driven plan options, such as arrangements that combine an HRA with a lower-deductible health plan or arrangements in which an insurer (rather than the employer as in the case of HRAs or the enrollee as in the case of HSAs) establishes an account for each enrollee. Other arrangements may be included in future surveys as the market evolves.↩︎
- The survey asks “Up to what dollar amount does your firm promise to contribute each year to an employee’s HRA or health reimbursement arrangement for single coverage?” We refer to the amount that the employer commits to make available to an HRA as a contribution for ease of discussion. As discussed, HRAs are notional accounts, and employers are not required to actually transfer funds until an employee incurs expenses. Thus, employers may not expend the entire amount that they commit to make available to their employees through an HRA. Some employers may make their HRA contribution contingent on other factors, such as completing wellness programs.↩︎