Higher deductibles help keep bottom line down
There’s a good chance during open enrollment this fall that you will be offered a high-deductible insurance plan with a savings account – if you haven’t already been nudged into one.
Increasingly, employers are offering this as a way to rein in their health insurance costs. The high deductible means lower premiums, benefits experts say. And employees – confronted with the prospect of potentially paying thousands of dollars before insurance kicks in – are less likely to run to the emergency room for minor problems, which also keeps costs down.
The plan frequently is paired with a health savings account, in which workers may set aside pre-tax money to cover the deductible and other medical costs. Employers sometimes chip in, too, to encourage participation.
This year, 19 percent of workers with insurance from an employer were enrolled in a high-deductible plan, more than double the percentage from just three years ago, according to the Kaiser Family Foundation. And these plans now have edged out HMOs as the second-most-popular option offered by U.S. employers, benefits consultant Aon Hewitt reports.
Studies suggest that these plans reduce health care costs – at least initially.
“They are seeing a savings. The question is why and if it’s sustainable,” said Paul Fronstin, director of the health research and education program at the Employee Benefit Research Institute. “The jury is still out.”
With employers seeing health care costs rise year after year, though, more are willing to try high-deductible plans. Some employers are beginning to make this their only choice.
Health savings accounts are different from flexible spending accounts, another popular option in which employees set aside money for health expenditures but the cash must be spent annually or it’s forfeited.
Under federal rules, plans paired with a health savings account must have a deductible next year of at least $1,250 for an individual and twice that for family coverage. Kaiser reported this year that the average deductible for a plan with a health savings account was $2,190 for an individual and $4,068 for a family.