Employers Prefer HSAs in CDHP Offerings

November 16, 2009 (PLANSPONSOR.com) – Among employers who offer a consumer-driven health plan (CDHP), health savings accounts (HSAs) continue to be the preferred funding choice, according to a survey by Aon Consulting and the International Society of Certified Employee Benefit Specialists.

Of the 370 survey respondents, 44% of employers currently offer a CDHP to employees – similar to last year, according to a press release. Of those offering CDHPs this year, 56% are now using the HSA model, 35% are using the Health Reimbursement Arrangements (HRA) model, and 9% use both.

Over the last three years, the gap has widened between HSAs and HRAs, as the number of employers offering HSAs has gone from 48% to 56%, and the number offering HRAs has dropped from 43% to 35%.  

The survey also found that more employers who offer an HSA plan are contributing money to the plan (66% versus 60% last year). The breakdown of this group is as follows: a flat dollar amount of less than $500 per person (15%), a flat dollar amount of $500 or more (45%), and a matching employer contribution (6%).

Employers offering an HRA plan make a wide variety of contributions to the account for a single employee: 4% provide less than $300; 11% provide between $300 and $499; 49% provide between $500 and $799; 1% provide between $800 and $999; and 34% provide $1,000 or more.

Employers currently offering a CDHP said they are mainly doing so to control health plan costs (38%) or to introduce “consumer engagement” into the purchasing of health care for long-term change (35%). Other reasons include: expanding employee choices (14%), encouraging better use of health care services (9%), and providing a vehicle for retiree medical savings (3%).

Employee enrollment in CDHPs remains low, as the survey found 63% of employers have more than 10% of their employees participating – similar to last year. Employers still mainly believe workers choose not to participate because they are concerned about high out-of-pocket costs (51%). Other reasons for low employee enrollment cited by employers include: traditional plan design preference (20%); lack of knowledge about CDHPs (10%); and a perception that CDHPs are too complex (5%).

The survey by Aon Consulting and the International Society of Certified Employee Benefit Specialists found the majority of employers (83%) offer a CDHP as an optional plan, while the remaining 17% have implemented a total replacement where the only plan choices offered to employees are CDHPs.

Fifty-six percent of all employers surveyed are not currently offering a CDHP, but 37% say they plan to offer one in the near future, according to the press release. Of this group, 6% are planning to offer one this year or next, while 31% are undecided on an effective date. Sixty-two percent of employers are not seriously considering a CDHP as a future plan offering.

There are a variety of reasons employers indicated why they are not seriously considering a CDHP. Twenty-seven percent of employers said they are satisfied with their traditional plan designs and 23% do not believe enough employees will enroll in a CDHP to make it worth offering. In addition, 13% indicated they do not want to expose employees to potentially high claim costs; 12% said they think a CDHP will siphon off healthy employees from their traditional plans, hurting overall plan costs; and 11% think the CDHP concept is too new and are waiting to see other employers' experiences before deciding to offer one themselves.

Among all respondents, the majority continue to be optimistic about the effectiveness of CDHPs, as 57% said they believe the plans make employees better, more efficient consumers of health care, but there are still concerns, as 25% said they feel CDHPs lead employees to forego needed health care to save money, and 5% believe the plans have no effect on employee health care purchasing.

Employer opinions on the future of the CDHPs are still split. Forty-five percent of employers said CDHPs will be successful in controlling employers' health care costs in five years; 26% do not believe they will be successful; and 29% indicated they are unsure of the impact it will have on health care costs.