Enrollment in health savings accounts and heath reimbursement arrangements continues to grow, but contribution patterns to these account-based health plans are changing, according to a new report from the nonpartisan Employee Benefit Research Institute.
“It’s not that employers are reducing how much they’re contributing, it’s that employers who are newly adopting the plans aren’t contributing as much as those who were already offered,” Paul Fronstin, director of EBRI’s Health Research and Education Program and author of the report, tells EBN exclusively. He speculated that it may be due to the economy.
According to the latest EBRI/MGA Consumer Engagement in Health Care Survey, there was $12.4 billion in HSAs and HRAs, spread across 8.4 million accounts in 2011. This is up from 2006, when there were 1.3 million accounts with $873.4 million in assets, and 2010, when 5.4 million accounts held $7.3 billion in assets. This growth reflects the increasing number of employers that offer these account-based health plans.
The EBRI survey shows that about two-thirds of workers with an HRA or HSA reported that their employer contributed to their account in 2011, a level that has remained steady since 2006. However, employer contribution levels have declined for some enrollees. Specifically, for those with employee-only coverage in these plans, annual contributions from their employer have fallen since 2008: The percentage reporting that their employer contributed $1,000 or more to the account dropped from 37% in 2008 to 24% in 2011.
Employer contributions of $1,000 or more to those with family coverage remained steady at 64%, EBRI found. By contrast, individuals’ contributions to HSA plans have increased: the percentage contributing $1,500 or more increased from 21% in 2006 to 44% in 2011.
Consumer-driven health plans commonly are sited as saving employers money (as much as $21 million per 10,000 members over the five-year period, according to an Aetna study in 2009), so if employers are dropping HSA/HRA contributions — generally billed as a selling point for employees — those cost savings for employers may not be translating into equal savings for employees, and could affect employees’ perception of how meaningful a health benefit truly is.
“It’s a judgment cal to what’s meaningful,” Fronstin says. “You’re seeing cost-sharing going up across the board, whether or not it’s in a consumer-driven plan. We don’t know if it’s increasing profits or covering costs.”
A survey by Towers Watson last year showed 75% of 260 employers that suspended their 401(k) matching contributions had restored them, but about three in four reinstated the matching contributions to their previous level. Twenty-three percent had restored them to a lower rate, and only 3% had increased matching to a higher rate.
Both trends go against a strengthening economy, where unemployment stands at 8.3%. Many experts have expected benefits to become more competitive as unemployment dropped. Fronstin says he couldn’t speculate if this shift in decreasing benefits signaled a possibility employers will withdraw from the health care game and send employees to exchanges, noting that “it’s too early to say what employers are going to do three years from now; there’s a lot of uncertainty.”
He also noted that while CDHPs once were seen as the answer to large claims by a small group of unhealthy employees, it hasn’t shaken out as expected.
“It doesn’t address catastrophic illness and there is still the 80/20 rule. That 20% doesn’t have much incentive to change just because they have a high deductible.”
The full report is published in the February 2011 EBRI Notes, “Employer and Worker Contributions to Health Savings Accounts and Health Reimbursement Arrangements, 2006-2011,” online at www.ebri.org.
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