HDHPs Are Not the Answer for Every Employee

Although employee costs are higher no matter what plan type they choose, employers need to help employees select the best health benefits plan for their financial situation.

By Rebecca Moore | January 31, 2017
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For the 2017 plan year, 56% of large employers on the Benefitfocus Platform offered a high-deductible health plan (HDHP) in addition to “traditional” copay-based plans—up from 52% a year ago.

However, employee selection behavior analyzed by Benefitfocus indicates HDHPs are not right for every employee. For example, Benefitfocus says, an employee in an HDHP who should really be in a preferred provider organization (PPO) can do much more harm than good to a company’s bottom line in the long run. If unable to afford paying out-of-pocket cost, the employee may go into debt or forgo necessary care, which could mean greater costs down the road

Employers should focus on guiding employees to enrollment decisions that make the most sense for their physical and financial health, Benefitfocus says.

When given the choice, 36% of employees enrolling through the Benefitfocus Platform selected an HDHP over a traditional plan for 2017—down five percentage points from 2016. PPOs held steady as the most popular option (43%), while other copay-based plans gained some popularity. Based on two years of enrollment data, two variables appear to heavily influence plan selection, Benefitfocus found. Specifically with respect to the question of PPO versus HDHP, an employee’s age group and salary may play a vital role in the decision on which of the two plans to choose.

HDHP participation was again higher than average for Millennials, especially those younger than 26, whose election rate for HDHPs rose to approximately 45% for 2017. Meanwhile, older members of the workforce continue to show a preference for traditional plans—primarily PPOs, in which participation rates have grown for every age group outside of Millennials.

However, the 2016 data revealed a significant difference between the average annual salaries of employees who selected HDHPs and those who selected PPOs when given the choice. The typical HDHP subscriber made approximately $5,000 more than the typical PPO subscriber. This suggests that lower-wage workers are less willing to take on the high out-of-pocket risk of HDHPs than their higher-wage peers, who presumably have more room in their budget for unexpected medical costs.

Knowing that Millennials typically make less money and participate in HDHPs at a higher rate than other age groups suggests they may need additional help understanding how to evaluate their health care options based on their financial situation. Employers should make it a point to communicate with their youngest workers through the channels and styles that will resonate and drive meaningful engagement, Benefitfocus says.

NEXT: Costs up regardless of plan, but employees are saving more