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Consumer-driven health insurance plans gaining popularity among employers Posted: September 30th, 2012

By Maryalene LaPonsie

As employers struggle to address the rising price of health care, many are turning to consumer-driven health insurance plans to cut costs. According to human resources firm Aon Hewitt, these plans have surpassed health maintenance organizations as the second-most popular health insurance benefit offered to workers.

Aon Hewitt surveyed 2,000 employers representing more than 20 million U.S. workers and their dependents. In 2011, the following percentage of employers offered these health insurance options to their workers:

  • Preferred provider organizations: 79 percent
  • Consumer-driven health plans: 58 percent
  • Health maintenance organizations: 38 percent

Basics of consumer-driven health plans

While PPOs and HMOs have been around for decades, consumer-driven plans are a relatively recent addition to the health insurance market.

Touted as low-cost health insurance, these plans are typically offered with high deductibles that shift a larger portion of health care costs to consumers. High deductible plans generally have a deductible of at least $1,000 for a single individual and $2,000 for a family plan. However, it is not unusual to find plans in this category with deductibles of $5,000 to $10,000.

Two perks of consumer-driven medical insurance are lower premiums and possible tax benefits. Eligible health insurance plans can be combined with Health Savings Accounts or Health Reimbursement Arrangements. Each operates differently but both offer a mechanism by which policyholders can pay for eligible medical expenses with tax-free dollars.

An HRA must be set up by an employer but anyone with an eligible high-deductible plan can set up a HSA through a participating financial institution. Plans are HSA eligible in 2012 if they have a minimum deductible of $1,200 for individuals or $2,400 for family coverage. Maximum out-of-pocket costs, not including premiums, cannot exceed $6,050 for individuals and $12,100 for families.

Employees still aren't convinced

While more than half of employers are offering consumer-driven health insurance plans, workers aren't signing up in droves yet. Despite being more affordable health insurance, Aon Hewitt says enrollment in these plans lags behind preferred provider organizations and point of service plans. Among employers offering consumer-driven plans, only 28 percent of workers enroll in an HSA eligible plan and 43 percent sign up for a plan with an HRA.

To encourage enrollment in these plans, many employers report using the following strategies:

  • Subsidizing premiums at a higher level than other health insurance plans: 36 percent
  • Covering preventive medications prior to the deductible being met: 34 percent
  • Contributing employer funds to an HSA: 30 percent
  • Contributing employer funds to an HRA: 22 percent

With health care costs continuing to rise -- they went up 6.9 percent from 2011 according to the 2012 Milliman Medical Index -- workers reviewing their open enrollment options should expect that to see more consumer-driven plans being offered.