Kaiser Health News recently released an article highlighting the increase in high deductible plans offered through large employers. The data was compiled through the annual health benefits survey conducted by Towers Watson and the National Business Group on Health.
Overall Findings on High Deductible Plans
Through the midst of the unknown in health care, organizations are looking for the simplest, fairest priced benefit plan to provide to their employees. The survey of 583 employers that employ more than 11.3 million employees and provide coverage to more than 8.5 million individuals revealed that many large companies are offering their employees only one option – a plan with a high deductible linked to a health savings account.
Nearly 66 percent of companies with 1,000 or more employees were offered a high deductible health plan (HDHP), which is expected to grow to 80 percent next year.
Smaller companies were also likely to provide coverage through an HDHP. Almost a quarter of workers at companies with less than 200 employees were covered in an HDHP.
As an overall trend, these companies saw their total health care spending reduce by 5 to 14 percent, mainly due to lower spending on prescription drugs and outpatient care.
Requirements under Federal Law
Under federal law, the Internal Revenue Service sets the standards for HDHP. In 2013, a health plan linked with a health savings account must have a deductible of at least $1,250 for individual coverage and $2,500 for family coverage. Maximum out-of-pocket expense is set at $6,250 for an individual and $12,500 for a family.
A health savings account (HSA) is typically linked to an HDHP and is defined as a tax-exempt trust account that is set up with a qualified HSA trustee to pay or reimburse certain medical expenses. To be eligible for a health savings account an employee must meet the following requirements:
- Be covered under an HDHP
- Has no other health coverage
- Is not enrolled in Medicare
- Is not claimed as a dependent on someone else’s tax return
Employees can deposit a limited amount each year but both workers and employers can contribute to the account. The survey found that about two-thirds of employers offering a health savings account put money into those accounts for their workers.
Benefits of Offering High Deductible Plans
These plans are increasing in popularity due to the list of benefits provided to both the employer and employee. Benefits mentioned in the survey include:
- Saves companies money
- Workers become more cost-conscious in choosing health care.
- Employers can take on a bigger role in educating their employees on comparing health care cost and quality.
- Lower monthly premiums for employees.
- Covers preventative care at 100% from the start and covers prescription drugs, doctor visits and hospitalizations after the deductible is met.
- Tax advantages when paired with a health savings account.
