HDHPs Appeal to Millennials and Higher-Income Employees

There is a continued shift toward consumer-directed health care, with the rate of employers offering at least one high-deductible health plan (HDHP) increasing more than 20% since 2016, according to Benefitfocus’ third annual “State of Employee Benefits” report.

The firm says this growth primarily stems from employers offering HDHPs alongside traditional health plans, reflecting the increased commitment among employers to offer more choice to employees. With respect to enrollment, the data indicates that employees’ health plan preference and benefits needs differ by demographic criteria, making plan diversity critical.

According to the report, there is mounting evidence that HDHPs are more appealing to employees with higher incomes. On average, employees enrolled in HDHPs for 2018 earn 7% more than employees enrolled in preferred provider organizations (PPOs)—a percentage difference more than twice what it was last year. This trend is consistent across all age groups. However, Millennials selected HDHPs at more than twice the rate of the most senior members of the workforce.

Participation in health savings accounts (HSAs) among employees in HDHPs grew by more than 60% percent, from roughly 50% in 2017 to 81% in 2018—with dramatic increases observed across every age group. Millennials were especially eager to adopt these accounts, nearly doubling their HSA participation from 2017. Employee contributions are up year over year—4% for single coverage and 3% for family coverage.

Benefitfocus’ State of Employee Benefits research represents an analysis of actual benefits enrollment data, aggregated anonymously across our large-group (1,000+ employees) customer base. The report may be downloaded from here.