UBA Survey Finds HSAs Outpace HRAs in Adoption and Participation Rates
Indianapolis, Ind., [July 10, 2014] – The number of employers offering Health Savings Accounts (HSAs) increased from 14.7% to 15.1% in 2013, and employee participation in these plans rose from 7.1% to 8.8% in the same period, according to new data released from the 2013 UBA Health Plan Survey, the nation’s largest health benefits survey. By contrast, the percentage of U.S. employers offering plans with Health Reimbursement Arrangements (HRAs) in 2013 was only 8.6% and employee participation in these plans dropped from 8.8% in 2012 to 8.6% in 2013. UBA expects these trends to continue as HSAs prove themselves to be better at driving consumer behavior and cost containment while still in compliance with the maximum allowable out of pocket costs under the Patient Protection and Affordable Care Act (PPACA) of $6,350 for individual and $12,700 for family coverage.
“The Patient Protection and Affordable Care Act (PPACA) originally capped deductibles at $2,000 for individuals and $4,000 for families, forcing employers to buy plans with lower deductibles, explains Elizabeth Kay, Compliance and Retention Analyst for AEIS, a UBA Partner Firm. “As a result, we saw premiums go up dramatically in 2014, for some as much as 250% to 400%. In 2014, PPACA legislation was amended to allow metal tier plans [e.g., platinum, gold, silver, etc.] to have higher deductibles. I think carriers will be more creative with their plan designs next year, and we may see a comeback of higher deductible and HSA qualified plans.”
HSA Funding Levels
The survey finds that on average, funding levels for plans with HSAs have remained constant for individuals at approximately $574 for both 2012 and 2013, while average funding for families increased from $928 in 2012 to $958 in 2013.
HRA Funding Levels
By contrast, funding levels of plans with HRAs increased significantly for individuals from $1,605 in 2012 to $1,766 in 2013, and for families from $3,075 in 2012 to $3,506 in 2013.
“Under PPACA, it seems unlikely that small employers will be able to use HRA contributions to get deductibles to the $2,000/$4,000 level,” says Rob Calise, UBA Board Chairman. “As a result, there will likely be a dramatic shift in funding strategies in the near future. For example, many of these employers may opt to partially self-insure their medical plans to significantly lower their premiums, versus having to buy a plan with more coverage than they need.”
Kay further explains, “Consumer-driven health plans (CDHPs) were designed to control costs by controlling consumption. However, many employers began to ‘wrap’ CDHPs with a partially or fully funded HRA account to make the overall plan more affordable for their employees. Unfortunately, this strategy backfired because employees were still not spending their own money and not changing their consumption so claims exceeded projected costs on these plans and premiums increased.”
“For example,” Kay said, “Aetna small group in California had originally allowed ALL of their 2014 plans to be ‘wrapped’ with an HRA. Some third party administrators (TPAs) claimed they could take a bronze level plan and turn it into a platinum plan with an Aetna bronze plan wrapped in an HRA. However, Aetna quickly changed their mind and as of March 31, 2014, no longer allows ANY of their plans to be ‘wrapped’ with an HRA. They now require the employer to sign a Statement of Understanding declaring they are not funding any of the deductible unless it is an HSA plan, and they are funding to a qualified HSA account. CDHP/HSA/HRA plans can be used effectively, but it is a fine line between what’s affordable for employers versus employees. That’s where a qualified advisor can help.”
UBA survey findings also show many differences in HSA/HRA funding levels regionally and across industries. For a copy of the 2013 UBA Health Plan Survey Executive Summary, go to http://bit.ly/PSEFrx, or request a custom benchmarking report targeted to your business.
Employee communication and education is critical to CDHP/HRA/HSA plan success. For a comprehensive guide on benefits communications, please download, “A Business Case for Benefits Communications” at http://bit.ly/1gJR3GE.
About the UBA Health Plan Survey
Data in the 2013 UBA Health Plan Survey, the nation’s largest health benefits survey, are based on responses from 10,551 employers sponsoring 16,928 health plans nationwide. Results are applicable to the small to mid-size companies that comprise approximately 98% of the nation’s five million-plus employers, as well as to larger employers, providing benchmarking data on a more detailed level than any other survey.
About United Benefit Advisors
United Benefit Advisors is the nation’s leading independent employee benefits advisory organization with more than 200 offices throughout the United States, Canada and the United Kingdom. As trusted and knowledgeable advisors, UBA Partners collaborate with nearly 2,000 fellow professionals to deliver expertise, thought leadership and best-in-class solutions that positively impact employers and make a real difference in the lives of their employees and families. Employers, advisors and industry-related organizations interested in obtaining powerful results from the shared wisdom of our Partners should visit UBA online at www.UBAbenefits.com.
csammartino (at) fishervista (dot) com