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    July-2017
 
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HSA Insurance Premiums Proven To Be Cheaper Than Competitive Offerings

After years of growing separation between Consumer Directed Healthcare and older healthcare insurance plans such as PPOs, a major study found a significant cost difference in 2011.

The respected Kaiser Family Foundation employer survey identified what many experts have been saying: Health Savings Account and Health Reimbursement Account insurance premiums are significantly lower overall than other plans.

The gap in premiums between HSAs and older benefit designs is being described as huge by pundits in the field.  The based this conclusion on the findings of the new Kaiser Family Foundation employer survey just released.

According to KFF, HSAs have 18% lower premiums. HRAs are at least 3% lower-priced for the average employer-paid family premium across the U.S.

The average 2011 HRA family premium is reported as $14,909 a year in the U.S. and the average HSA premium is $12,655, compared with $15,363 for non-CDH plans. All three are paid for with different out-of-pocket cost combinations: HSAs have the highest OOP cost but are the fastest-growing, HMOs have the lowest OOP cost but are the least-popular option.

These premium differences are clearly driving adoption. Using the KFF definition, CDHPs are offered to almost 25% of all workers nationwide, and the latest survey finds that 17% of all employees are now in an HSA or HRA. The most telling stat: 84% of all employers now offer only one type of plan.

These same pundits argue this bodes well for total replacement HSA or HRAs going  forward.

According to JoAnn M. Laing, chairperson of Information Strategies, Inc. which has surveyed and monitored the HSA sector since its inception, “the promise of HSAs as a vehicle to reduce overall healthcare insurance costs for individuals and employers is being borne out.”

“Our studies have shown that once HSAs (and HRAs) gained traction growth would move on a high level in ensuing years. 2011 proved to be the tipping point.

Healthcare insurance options offered by businesses show that CDHPs are moving up fast on offer rate: 23% across all firms. HMOs are offered at 16% of firms, and “POS” is at 24%.  Pure PPOs without any account are still strong, but just fell to a 50% offer rate across all firms.  CDHPs have the second-highest offer rate (behind PPOs) in firms with over 200 workers.

HRA and HSA-Qualified HDHP Features for Covered Workers 2011

Annual Plan Averages for:

HDHP/HRA

HSA-Qualified HDHP

 

Single

Family

Single

Family

Premium

$5,227

$14,909

$4,427

$12,655

Worker Contribution

881

4,253

589

3,076

Annual Deductible

1,763

3,394

2,033

3,865

Out-of-pocket Max

3,363

7,083

3,304

6,483

Employer Funding

861

1,539

611

1,069

SOURCE: Kaiser Family Foundation/HRC

Some 23% of U.S. employers in 2011 offer an HRA or HSA as defined by KFF, a big increase over last year. Large firms with over 1000 workers are the biggest backers of CDHPs: 41% told KFF they offer a CDHP compared with 23% of small firms and 26% of mid-sized firms. KFF says that total enrollment of employees in CDHPs has risen to 17% of the U.S. workforce.

While there may be some discrepancies in definitions, there is no doubt the underlying total growth trend clearly shows a shift to CDH products. Their inclusion in health exchanges seem assured but not guaranteed.


© 2017, Information Strategies, Inc.
P.O. Box 315, Ridgefield, NJ 07657
201-242-0600