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Q3 2016
INSURANCE SERVICES
Delivering essential employee benefit and commercial insurance information to customers and our members EMPLOYEE BENEFITS
High-deductible Plans Gain Favor, but PPOs Still Tops MORE EMPLOYEES than ever before are opting for high-deductible health plans (HDHPs), but preferred provider organizations (PPOs) are still the most popular among group plans, a new study has found. Thirty-four percent of employees selected an HDHP for 2016 when it was offered alongside a traditional health plan, with millennial employees over age 26 the most likely to choose the option at 40%, according to a report by benefits management technology provider Benefitfocus Inc. The company analyzed enrollment data from 2,400 midsize employers using its technology platform. The study found that 87% of midsize employers offer traditional plans – health maintenance organizations (HMOs) and PPOs.
Forty-three percent of employees opted to enroll in a PPO plan, and 14% chose an HMO, the study showed. And while HDHPs are popular since they have low up-front costs in terms of premiums but high out-of-pocket expenses, only 13% of midsize employers offer them. For employees enrolled in HDHPs, the average deductible for individual coverage was $2,382 last year for individual coverage and $4,889 for family coverage, the study found. The average deductible in PPOs was $1,415 for individual coverage and $3,403 for family coverage. Interestingly, that qualifies the average PPO as an HDHP since the IRS defines an HDHP as a plan that has a deductible of $1,300 for single coverage and $2,600 for families.
The study also found that health savings accounts (HSAs) and flexible spending accounts (FSAs) are quite underutilized, which means many employees are leaving thousands of tax-free dollars on the table. With out-of-pocket responsibility so high across all health plans, many employees might not be able to pay for unexpected medical costs. If you are not already doing so, you should consider offering either an HSA or FSA to help your employees set aside pre-tax funds to pay for medical expenses. When copays and coinsurance are considered, employees are actually paying out much more for their health care. Across HDHPs and PPOs, the average out-of-pocket maximum ranges from 1.8 to 2.7 times its corresponding deductible amount. See ‘Most Plans’ on page 2
HDHPs vs. PPOs
Elections by Plan Type, When Offered at Least One HDHP and One Traditional Plan
7%
Average deductible
2%
14%
HDHP
PPO HDHP
PPO
HDHP $4,889
43%
$3,403
HMO No Election Other
PPO
$2,382
34%
Source: “State of Employee Benefits” report by Benefitfocus Inc.
V M A M E A N S VA L U E - A D D E D
For a quote on workers’ comp insurance, business insurance, or health insurance, please contact David Katz.
$1,415
Individual coverage
Family coverage
C O N TAC T U S
David Katz CA License #0712961 800-659-3363 david@vma.bz