High Deductible Plans Growing with Small and Large Employers

As employers cut back on health care spending, more small and large employers are offering high deductible health plans (HDHPs) among their benefit options, often paired with a tax-free spending account or Health Savings Account (HSA) to pay medical bills into which both employers and employees can contribute pre-tax dollars.

Per the 2016 Kaiser Benefit Survey, health insurance premiums have increased 213% since 1999. In 2016, 29 percent of all workers were enrolled in a High Deductible Health Plan (HDHP). This is a dramatic rise since 2006, when just 4 percent were covered under such plans. The latest survey also suggests that 51 percent of employees have annual deductibles of over $1,000.

A high deductible health plan (HDHP) will offer lower premiums the higher the deductible and out-of-pocket maximum compared to a traditional plan. The HDHP typically offers preventive benefits before a deductible is paid encouraging this care. But shifting a larger portion of the cost to consumers, plans with significant cost-sharing can curb utilization of medical services, since patients may think twice about spending money on care deemed avoidable, deferrable, or unnecessary.

Employers may consider encouraging their workers to take part in health savings accounts or flexible spending accounts to cover the higher out-of-pocket costs associated with high deductible health plans. Health Savings Accounts provide employees with a triple tax benefit; pre-tax contributions, tax-free earnings and tax-free withdrawals when used for approved healthcare expenses.


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