High Deductible Health Plans Continue to Grow

July 11, 2011 (PLANSPONSOR.com) – PricewaterhouseCoopers' 2011 Health &Well-Being Touchstone Survey shows the average reported increase in employers’ medical plan costs was 8% for 2009 and 7.8% for 2010.

Thirty-five percent of respondents have gross costs greater than $10,000 per employee per year (up from 25% last year), and 38% of participants have net costs greater than $8,000 per employee per year (up from 28% last year).  

According to the report, employee contribution percentages stayed relatively unchanged from 2010 to 2011. Most common for both employee and dependent coverage continues to be 20%-24%. Employee contributions tended to be lower for companies with less than 1,000 employees as well as those in the Health, Insurance, and Nonprofit industries. Employee contributions tended to be higher in the Retail & Consumer industry.  

While Preferred Provider Organization (PPO) remains the most common plan design, high deductible health plans continue to grow. Enrollment in high deductible plans with health savings accounts (HSAs) increased from 20.5% to 29.5% in 2011. Enrollment in high deductible plans with health reimbursement accounts (HRAs) increased from 34.2% to 37.9% in 2011. The percentage of employers reporting a high deductible health plan as having the highest employee enrollment increased to 17% in 2011 (up from 8% two years earlier).  

Forty-three percent of responding employers continue to provide retiree medical programs; 62% of employers with more than 5,000 lives offer retiree medical, while 33% of employers with less than 5,000 lives offer retiree medical coverage. Seventy-one percent do not provide retiree medical to new hires. 

Of those who provide retiree medical programs, 63% subsidize pre-65 retiree medical coverage (44% provide access only), and 52% subsidize post-65 retiree medical coverage (34% provide access only).

The Impact of PPACA  

According to the PricewaterhouseCoopers 2011 Health &Well-Being Touchstone Survey, 84% of companies indicated they would make changes to their plans to offset costs associated with the Patient Protection and Affordable Care Act (PPACA). More than half (51%) did not maintain grandfather status with respect to PPACA.  

Eighty-nine percent of respondents said they expect to increase their company’s efforts related to wellness and health management, and 45% of companies indicated they are likely to change subsidies for employee medical coverage as a result of PPACA (50% for dependent medical coverage subsidies). Nearly two-thirds (65%) of companies expect a financial impact from the PPACA excise tax on high cost plans.  

Seventy-three percent of all survey participants and 88% of large employers (>5,000 lives) offer wellness programs to eligible individuals. While 55% indicated their wellness program was minimally or not effective, two-thirds are expecting to increase their efforts related to health and wellness in the United States.  

The survey found participation by employees in wellness programs was higher when incentives were offered. Sixty-six percent of all survey participants and 86% of large employers (>5,000 lives) offer disease management programs to eligible individuals, although participation rates are typically low.

Other Benefits  

The PricewaterhouseCoopers 2011 Health &Well-Being Touchstone Survey found 401(k) plans are the most prevalent form of retirement program offered by respondents (86%). Forty-seven percent vest employer contributions immediately, while 53% vest contributions within three years. The most common 401(k) match is 1%-25% (35%); 54% provide a maximum match of 4% or more to the 401(k). Forty-seven percent provide a default 401(k) employee contribution percentage – typically 3%.  

Nearly a third (32%) of respondents offer a defined benefit plan, with 45% of those plans closed to new accruals or closed to new employees.  

The most common work life programs included telecommuting (51%), flexible schedules (46%), parental leave (35%), and reduced hours (30%).  

The survey was completed in the first quarter of 2011, and contains detailed benefits information provided by approximately 1,700 participating companies in 32 different industries across the nation.  

The survey report is here.