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 them their only choice.
High-deductible plans sprang up in the late
1990s, partly in response to the public revolt against health maintenance
organizations, which were seen as limiting access to needed care, according to
a report released last month by the Robert Wood Johnson Foundation.
Health savings accounts started to appear in
2004. Employees can contribute untaxed money into this account and use it later
to pay deductibles and other medical expenses. About one-third of employers add
money to workers’ accounts, according to an Aon Hewitt survey.
For 2013, the most that can be contributed to a
health savings account is $3,250 for an individual and $6,450 for those with
family coverage.
Any money unused at the end of the year remains
in the account, where it can earn interest or be invested. When employees leave
the company, they can take the money with them.
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.
Some plans will pick up the full cost of coverage
once the deductible is met, while others require workers to pay a certain
percentage of their medical bills until they hit a cap. Next year, the maximum
out-of-pocket expense will be $6,250 for an individual and twice that for
families.
Some employers offer a health reimbursement
arrangement instead, which follows different rules. The employer contributes
money annually on behalf of workers, and the company keeps any balance left
over once employees leave.
High-deductible plans often are called
consumer-directed health plans, a name that implies patients will question
their doctors on whether a test is really necessary or insist on generics over
brand-name drugs.
Initial surveys suggest the plans do change
behavior somewhat — although maybe not as intended.
The Rand Corp. reported in a study released last
year that compared with others, consumers spent an average of 14 percent less
on health care the first year that they switched to a high-deductible plan.
Most of the savings comes from people going to
the doctor less often, while the rest came from consumers managing their care,
such as asking for generic drugs, said Amelia Haviland, an associate professor
at Carnegie Mellon University and an author of the Rand study.
One troubling sign: The study found that
consumers in high-deductible plans cut back on preventive care, such as
childhood vaccinations and cancer screenings, even when these services were
fully covered by insurance. The study concluded that there may be confusion
over the plans.
That could signal problems in the future.
“It might seem like you have lower costs in one
year,” said Cheryl Fish-Parcham, deputy director of health policy for the
advocacy group Families USA. “Your employees haven’t used services that year.
It doesn’t mean that their health didn’t get worse. You might have higher costs
showing up down the line.”
Unfortunately, there are no simple rules of thumb
for workers to know whether they are better off in a high-deductible plan or
more traditional one. Workers just need to do the math on each plan.
Experts said workers should look at the
deductible and make sure they can afford to pay it all at once, which could
happen — even to young, healthy employees — if an accident occurs. This, of
course, could be offset significantly by a generous employer contribution to
the health savings account.
One critical measure to look for and be sure you
understand: the maximum your plan requires workers to pay out of pocket
annually.
“The bottom line: If you get really sick, you
want to know how much you have to pay,” said Gary Claxton, a vice president
with the Kaiser Family Foundation. “That’s what insurance is really for.”