Consumer-Directed U.S. Health Insurance Surges

CHICAGO | Thu., Apr. 19, 2012 3:32pm EDT (Reuters) — Currently, 59% of major employers have a consumer-driven health plan option in place, up from 53% a year ago, according to a survey by Towers Watson and the National Business Group on Health. The groups queried companies with 1,000 or more employees across a range of industries.

More significantly, employee enrollment in CDHPs has spiked at companies offering them as a choice. This year, 27% of eligible employees are enrolled, a 35% increase from 2011. That finding mirrors a Fidelity Investments report last week showing a 61% surge in sign-ups for health savings accounts among its client companies – the largest one-year gain since Fidelity has been offering HSAs.

CDHPs are linked to tax-advantaged HSAs, because contributions can be used to accumulate funds to help pay costs not covered by the high-deductible plans.

Savings on premium costs are the key driver. Employers expect their healthcare costs to jump 5.9% this year, according to the Towers/NBGH survey. Total annual premiums paid by employers and workers for high-deductible plans in 2011 were 10% to 19% lower than for managed care or traditional point-of-service plans, according to a Kaiser Family Foundation study.

For example, Kaiser found that the average annual cost for individual coverage through a high-deductible plan last year was $4,793 — 15% lower than for a PPO managed care option.

“Everyone saves some money, and that really matters in tough economic times,” says Helen Darling, president and CEO of NBGH.

Another motivator for employers is to avoid the excise tax on high-value “Cadillac” health plans under the Patient Protection and Affordable Care Act. Starting in 2018, plans with total value over $10,200 for individual coverage and $27,500 for families will be subject to a 40% tax on the amount exceeding those thresholds. High-deductible plans offer employers a way to avoid triggering the tax.

(Editing by Beth Pinsker Gladstone, Linda Stern and Dan Grebler)

On April 26th, 2012, posted in: NEWS by

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