Group plans are increasingly expanding their consumer-directed health plans with health savings accounts, after toying with lower deductibles and reimbursement account wrapping.
The number of employers offering Health Savings Accounts (HSAs) ticked up from 14.7 percent to 15.1 percent last year, and employee participation increased from 7 percent to 8.8 percent, according to an annual survey by United Benefits Advisors.
The number of employers offering Health Reimbursement Arrangements (HRAs), meanwhile, was only 8.6 percent last year, with employee participation falling a bit to reach the same percentage.
Analysts at United Benefits Advisors expect the trends to continue -- and that HSAs will "prove themselves to be better at driving consumer behavior and cost containment" while still complying with maximum allowable out of pocket costs set under the Affordable Care Act, $6,350 for an individual and $12,700 for a family.
While considered to be slightly more expensive for businesses, HSAs can usually be a better deal for workers if their employers contribute to them and in effect create a small fund to cover or at least help pay for out-of-pocket costs. It makes workers act as healthcare consumers as they seek and choose healthcare services, while still potentially limiting exposure to high out-of-pocket costs.
The ACA originally capped deductibles at $2,000 for individuals and $4,000 for families and that led employers to buy plans with somewhat lower deductibles, noted compliance and retention analyst Elizabeth Kay.
"As a result, we saw premiums go up dramatically in 2014, for some as much as 250 percent to 400 percent," Kay said in a media release.
With higher deductibles now permissible, she said, "I think carriers will be more creative with their plan designs next year, and we may see a comeback of higher deductible and HSA qualified plans."
Average funding levels for HSAs have remained mostly constant for individuals over the past two years, at around $575, while funding levels for families grew on average from $928 to $958, the survey found -- as HRA funding levels actually increased, from $1,605 to $1,766 for individuals, and from $3,075 to $3,506 for families.
"Consumer-driven health plans were designed to control costs by controlling consumption," said Kay. "However, many employers began to 'wrap' CDHPs with a partially or fully funded HRA account to make the overall plan more affordable for their employees. Unfortunately, this strategy backfired because employees were still not spending their own money and not changing their consumption so claims exceeded projected costs on these plans and premiums increased."
Kay pointed to an Aetna small group plan in California that had originally allowed all 2014 plans to be wrapped with an HRA. Then, some third party administrators claimed they could take a bronze level plan and "turn it into a platinum plan with an Aetna bronze plan wrapped in an HRA" -- leading Aetna to backtrack and no longer allow HRA wrapping.
Employers on the group plan now have to sign a statement of understanding agreeing not to fund any of the deductible unless it is an HSA plan. "CDHP/HSA/HRA plans can be used effectively, but it is a fine line between what's affordable for employers versus employees," Kay said.
Based on these trends, United Benefit Advisors board chairman Rob Calise argues that "there will likely be a dramatic shift in funding strategies in the near future." More employers may opt to "partially self-insure their medical plans to significantly lower their premiums, versus having to buy a plan with more coverage than they need."
Those views fall in line with new findings from the Employee Benefit Research Institute, whose recent study concluded that people with HSAs are more likely to engage in cost-conscious healthcare behavior than are those in HRAs. The Institute found that HSA participants were more likely to ask for generic drugs instead of brand name treatments, inquire about services prior to receiving them, develop healthcare budgets or use cost-tracking tools.