After initial skepticism from employers, the concept of health savings accounts (HSAs), coupled with high deductible health plans (HDHPs), is beginning to gain traction in the marketplace, a poll has found.
The information was contained in the latest Employee Benefits Market Survey released by The Council of Insurance Agents & Brokers.
The Washington, D.C.-based insurance brokers' association said that compared with spring 2005, the fall 2005 survey showed a definite rise in the number of commercial clients who are viewing HDHPs 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, between 1 percent and 10 percent, were inquiring about the HDHP/HSA approach.
In this fall's survey, those reporting minimal interest from their clients dropped to 22 percent. However, almost one-third of the survey's respondents, 77 total, said more than half of their customers were showing greater interest 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 as a replacement for an existing plan.
Asked how much the typical employer is contributing to the employee's HSA plan, 29 percent of the survey's respondents said their clients were offering between $500 and $749 a year. But 23 percent said their employer clients were not making any contribution.
According to 86 percent of the respondents, 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.
Forty-seven percent cited the inability of those plans to carve out prescription drug coverage, and 34 percent cited difficulty in coordinating HSAs with existing flex spending or health reimbursement accounts as the reason employers were wary of the new approach.
On the expense side, the survey showed that group medical expenses increased for all sizes of accounts during the past six months. Three-fourths of the large accounts (502 or more employees) experienced rate hikes from 1-to-20 percent when they renewed their medical insurance.
The rate increases were sharper for small accounts (50 or fewer employees) and medium-size accounts (51 to 500) businesses. Nearly two-thirds of those accounts experienced a 10-to-20 percent increase in premiums. Twelve percent of small accounts and 7 percent of medium accounts experienced premium increases of 20-to-30 percent.
CIAB said 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 upfront 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-to-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," CIAB said one benefits broker from the Southeast said.
The cost of group life benefits held steady or dropped 1-to-10 percent for the vast majority of their accounts of all sizes, according to the survey. The only significant increase in group life premium rates reported in the survey was for small accounts, where 25 percent of the brokers reported premium rates for renewals increased 1-to-10 percent since the last survey in May 2005.
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