Blog & News
More Employees Chose High-Deductible Plans in 2014
August 19, 2016:
A new SHADAC analysis of employer-sponsored insurance (ESI) coverage found that: |
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• | The percentage of workers nationwide enrolled in high deductible health plans (HDHPs) offered by their employers increased by more than 14 percentage points between 2010 and 2014, growing from 20.8% to 35.2%. |
• | More than a third of this growth occurred between 2013 and 2014, when the rate of HDHP enrollment increased by 4.9 percentage points. |
• | Among the states, fourteen saw statistically significant increases in the percent of workers enrolled in HDHPs from 2013 to 2014. |
• | In 2014, the percent of private sector workers ranged widely among the states, from a low of 3.1% in Hawaii to a high of 61.2% in Maine. |
State-Level HDHP Enrollment | ||||
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Top Ten States | Bottom Ten States | |||
State | Enrollment (%) | State | Enrollment (%) | |
Maine | 61.2 | Hawaii | 3.1 | |
New Hampshire | 56.3 | District of Columbia | 13.7 | |
South Dakota | 51.7 | Maryland | 21.4 | |
Tennessee | 48.7 | Alabama | 21.6 | |
Vermont | 48.3 | Nevada | 24.4 | |
Wisconsin | 46.7 | New York | 27.1 | |
Iowa | 46.0 | California | 27.8 | |
Minnesota | 45.1 | New Mexico | 28.0 | |
Arizona | 45.0 | Pennsylvania | 28.1 | |
Florida | 44.3 | Washington | 28.6 |
This analysis used data from the Insurance Component of the 2010 to 2014 Medical Expenditure Panel Survey (MEPS), sponsored by the federal Agency for Healthcare Research and Quality (AHRQ).
Read the full report, which includes 50-state tables and individual state profiles, here.
Stay tuned for further state-level analysis of premiums and costs related to employer-sponsored insurance, coming soon.
What is a high deductible health plan (HDHP)?
A plan with a deductible requires an upfront payment for medical services before insurance coverage kicks in. For example, if the deductible is set at $500, the individual will have to pay all of the expenses of any covered medical treatment up to $500. After the deductible has “been met” (i.e., the individual has paid for $500 worth of medical bills). All medical bills greater than the $500 deductible are covered by the health plan. [1]
For the purposes of our analysis, we define a high deductible health plan as one that meets the IRS-defined minimum plan deductible amount required for Health Savings Account (HSA) eligibility – i.e., $1,250 for an individual and $2,500 for a family in 2013 and 2014.
Why are more people enrolling in HDHPs?
HDHPs have become increasingly popular over recent years because they help to keep premiums affordable, thereby helping get more people covered, and are meant to provide an incentive for people to (a) use medical care only when they need it and (b) shop around for the care they do use.
What's the relationship between HDHPs and Health Savings Accounts?
HDHPs can be coupled with Health Savings Accounts (HSAs), which are accounts set up by individuals or employers where individuals can use pre-tax money to pay for incurred medical expenses. To be eligible for an HSA in 2016, the IRS set minimum deductible levels at $1,300 for individual or self-only coverage and $2,600 for family coverage. Many of the lowest price premiums for coverage sold on the Health Insurance Marketplace (i.e., the bronze plans) will have deductibles that make them HSA-eligible.
The advantage of HDHPs is that they are associated with lower premiums – making health insurance more affordable and accessible. Additionally, deductibles do not apply to preventive services – including screening, immunizations and an annual physical – which must be provided with no out-of-pocket (OOP) payment under the ACA.
And what's the downside of HDHPs?
The main disadvantage of HDHPs is that the higher deductibles (which in 2016 can reach up to $6,550 for an individual and $13,100 for a family in 2016) may act as a significant barrier to getting needed care. This can be especially problematic for people with chronic conditions or those facing a medical emergency. Additionally, while deductibles do not apply to preventive services, there may be confusion about this among HDHP enrollees, who may unnecessarily forgo preventive care due to cost concerns.
Another disadvantage of HDHPs is that it can be difficult to understand what payments are eligible to contribute toward one's deductible. In most cases, payments for services provided by out-of-network providers or for non-covered benefits (e.g., vision, dental, over-the-counter medicines, brand name prescriptions, etc.) do not count toward the deductible.
Finally, hospitals and other providers have raised concerns about the difficulty of collecting the required out-of-pocket payments at the point of service, a challenge that can contribute to bad medical debt.
[1] Individuals may still be required to pay a portion of medical expenses after this point if their plan involves co-insurance – for example, many plans will pay 80% of the billed amount with the patient covering the remaining 20%. Additionally, any co-pays would still apply.