Health Savings Account Blog

The fall 2005 survey showed a definite uptick, compared with spring 2005, in the number of commercial clients who are viewing High Deductible Health Insurance Plans and HSAs as a health benefits option to be offered in the workplace. In the spring, 40 percent of survey respondents said only a handful of their customers - 1-10 percent - were inquiring about the HDHP/HSA approach. This fall, those reporting minimal interest from their clients had dropped to 22 percent, while almost one-third of the respondents said more than half of their customers were interested in HDHPs and HSAs.

In addition, 71 percent of the respondents reported actually selling an HDHP-HSA plan for 2006 compared with 65 percent who reported selling a plan in the spring survey.

According to the fall survey, about two-thirds of employers who offer an HDHP-HSA plan do so as an option, rather than a replacement for an existing plan. Asked how much the typical employer is contributing to the employee's Health Savings Account, 29 percent of the survey respondents said their clients were offering between $500 and $749 a year. But 23 percent of the respondents reported that their employer clients were not making any contribution whatsoever.

The most common reason cited for resistance to HSAs in the workplace was the complexity of the concept and the amount of education required for plan participants, according to 86 percent of the respondents. Forty-seven percent cited the inability of those plans to carve out prescription drug coverage, and 34 percent said difficulty in coordinating HSAs with existing flex spending or health reimbursement accounts as the reasons employers were wary of the new approach.

The survey showed that group medical expenses increased for all sizes of accounts during the past six months, with three- fourths of the large accounts (502 or more employees) experiencing rate hikes of from 1-20 percent when they renewed their medical insurance. The rate increases were even sharper for small (50 or fewer employees) and medium (51 to 500) businesses, with nearly two-thirds of those accounts experiencing a 10-20 percent increase in premiums, and an additional 12 percent of small accounts and 7 percent of medium accounts experiencing premium increases of 20-30 percent.

The benefits brokers reported that employers are dealing with the rising price of group medical coverage by increasing deductibles and co-pays for their employees, increasing the employee share of premium costs, assessing prescription drug co- pays and instituting up-front hospital and outpatient co-pays.

The least likely option taken by employers, the survey showed, was discontinuing medical coverage. Ninety-six percent of the respondents said only 1-10 percent of their customers picked discontinuing medical coverage as an answer to rising costs.

"Benefit design has not deteriorated even in the face of rate increases because employers are having a very difficult time finding and retaining qualified people," said one benefits broker from the Southeast.

The brokers said the cost of group life benefits has held steady or dropped 1-10 percent for the vast majority of their accounts of all sizes. The only significant increase in group life premium rates reported in the survey was for small accounts, where 25 percent of the brokers reported that premium rates for renewals had increased 1-10 percent since the last survey in May 2005.