Health Reform WK-EDGE More workers are enrolling in high-deductible health plans with HSAs, premiums rise modestly
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Wednesday, September 28, 2016

More workers are enrolling in high-deductible health plans with HSAs, premiums rise modestly

By Carol Potaczek

The average annual workplace family health premium rose a modest 3 percent to $18,142 in 2016, and the average deductible for high-deductible health plans rose 12 percent to $1,478 annually, according to figures recently released by the Kaiser Family Foundation (KFF). KFF further reports that, at small firms, average deductibles now top $2,000. Furthermore, few employers reported changing workers’ hours due to the Patient Protection and Affordable Care Act’s (ACA) (P.L. 111-148) employer requirements, and those that did were more likely to shift workers to full-time status.

The 3 percent increase in annual family premiums for employer-sponsored health insurance are modest at a time when workers’ wages (2.5 percent) and inflation (1.1 percent) also grew modestly, according to the benchmark KFF/Health Research & Educational Trust (HRET) 2016 Employer Health Benefits Survey. Workers on average contribute $5,277 annually toward their family premiums.

This year’s low family premium increase is similar to last year’s (4 percent) and reflects a significant slowdown over the past 15 years. Since 2011, average family premiums have increased 20 percent, more slowly than the previous five years (31 percent increase from 2006 and 2011) and more slowly than the five years before that (63 percent from 2001 to 2006).

Slow rise in premiums, higher deductibles. In 2016, 29 percent of all workers were in such plans, up from 20 percent in 2014, while a shrinking share of workers (48 percent in 2016, down from 58 percent in 2014) are enrolled in Preferred Provider Organization (PPO) plans, which have higher-than-average premiums. These shifts effectively reduced the average premium increase by half a percentage point in each of the past two years, the analysis shows.

Again, partly as a result of this trend, the survey finds average deductibles continuing to rise for covered workers. In 2016, 83 percent of covered workers face a deductible for single coverage, which averages $1,478. That’s up $159 or 12 percent from 2015, and $486 or 49 percent since 2011. The average deductible for workers who face one is higher for workers in small firms (three to 199 employers) than in large firms ($2,069 vs. $1,238).

For the first time, the survey also finds half (51 percent) of all covered workers face deductibles of at least $1,000 annually for single coverage. This includes two-thirds (65 percent) of workers at small firms (three-199 workers), who typically face higher deductibles than workers at large firms (200 or more workers).

In some cases, employers make contributions to tax-preferred HSAs or HRAs, which workers can use to pay part or all of their deductible expenses, thereby reducing their effective deductible. Counting employer contributions this way would reduce the share of covered workers with deductibles of at least $1,000 to 38 percent.

This year, the ACA provision requiring employers with at least 50 full-time equivalent employees to offer health benefits to full-time workers or pay a penalty took full effect. The survey finds 93 percent of firms with at least 50 employees offer health benefits to at least some employees, and the vast majority say their coverage meets the ACA’s requirements for value and affordability.

Few are reducing worker hours. The survey finds little evidence that businesses are reducing workers’ hours to avoid the law’s requirements to offer coverage. In fact, more employers with 50 or more full-time equivalent workers who offer coverage say they shifted or plan to shift workers’ hours from part-time to full-time status to make them eligible for health benefits (7 percent) than say they shifted or plan to shift workers from full-time to part-time status to make them ineligible (2 percent).

Overall 56 percent of employers offer health benefits to at least some of their workers this year, statistically unchanged from 57 percent last year. Offer rates vary by firm size, with less than half (46 percent) of the smallest firms (three to nine workers) offering coverage and essentially all employers with at least 1,000 workers doing so. Since 2011, the share of firms with 10 to 49 workers who offer coverage has fallen from 74 percent to 66 percent.

Other findings. Other findings from the survey include:

  • Single Premiums. Premiums for single coverage now average $6,435 annually, of which workers contribute $1,129 on average.
  • Cadillac tax. The survey provides an updated look at employers’ response to the Affordable Care Act’s excise tax on high-cost health plans, sometimes called the "Cadillac tax," which is now scheduled to take effect in 2020. Nearly two thirds (64 percent) of large employers offering health benefits say that they conducted an analysis to determine if any of their plans would exceed the Cadillac tax thresholds, and a quarter (27 percent) of this group say their largest plan would do so. In addition, 15 percent say they have increased their plan’s cost-sharing to avoid reaching the excise tax thresholds, and 9 percent say they switched to a lower-cost health plan.

Companies: Kaiser Family Foundation

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