Benefits November 16, 2006

Employers Boost CDHP Offering, Worker Participation Lags

November 16, 2006 (PLANSPONSOR.com) - Employers are increasingly offering health savings account (HSA) or health reimbursement account (HRA) benefit options to employees in an effort to reduce health benefit costs, but worker participation rates remain low, according to a recent survey.
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The 2006 Spencer Survey of Consumer-Driven Health Plans (CDHPs) found that during this year’s benefits enrollment period the number of employers offering an HSA has increased to 28% from 12% in 2005. According to a press release on the survey results, the number offering an HRA has increased to 18% from 9% in 2005.

Meanwhile, CDHP popularity among workers remains low, with an average participation rate for HSAs of only 3% and for HRAs only 5%, the release said. In spite of this, the survey found more employers still plan to offer additional CDHP options over the next year, with 41% of respondents saying they will offer HSAs, and 23% saying they plan to offer HRAs.

Flexible spending accounts (FSAs) proved to be more popular among both employers and employees according to the survey results, as 64% of employers offered an FSA in 2006, compared to 57% offering the option in 2005. The take up rate for FSAs by employees came in at 21%.

The most common reason for employers’ shift toward CDHPs is to curb costs that the survey found have reached an average of $6,700 per employee annually. Following the 41% of employers that say cost is the primary reason, 19% say they offer CDHPs to provide a savings vehicle for employees, and 16% say they do so to give their workers more health care plan options.

The survey of HR and benefits professionals was conducted via the Internet and email, and represents the responses of 121 organizations. Spencer’s Benefits Reports is available as an annual online subscription. To order, call 1-800-449-9525.

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