Everything old is new again. As open enrollment gets underway for next year's job-based health insurance coverage, some employees are seeing traditional plans offered alongside or instead of the plans with sky-high deductibles that may have been their only choice in the past.
Some employers say that, in a tight labor market, offering a more generous plan with a deductible that's less than four figures can be an attractive recruitment tool. Plus, a more traditional plan may appeal to workers who want more predictable out-of-pocket costs, even if the premium is a bit higher.
That's what happened at Digital River, a 650-person global e-commerce payment processing business based in Minnetonka, Minn.
Four years ago, faced with premium increases approaching double digits, Digital River ditched its traditional preferred provider organization plan in favor of three high-deductible plans. Each had different deductibles and different premiums, but all linked to health savings accounts that are exempt from taxes. This year, though, the company added back two traditional preferred provider plans to its offerings for workers.
Even with three plan options, "we still had employees who said they wanted other choices," said KT Schmidt, the company's chief administrative officer.
Digital River isn't the only company broadening its offerings. For the third year in a row, the percentage of companies that offer high-deductible plans as the sole option will decline in 2020, according to a survey of large employers by the National Business Group on Health. A quarter of the firms polled will offer these plans, sometimes called consumer-directed plans, as the only option next year, down 14 percentage points from two years ago.
That said, consumer-directed plans are hardly disappearing. Fifty-eight% of covered employees worked at companies that offered at least one high-deductible health plan in 2019, according to an annual survey of employer health benefits released by the Kaiser Family Foundation last month. That was second only to the 76% of covered workers who were at firms that offered a PPO plan. (KHN is an editorially independent program of the foundation.)
When Digital River switched to all high-deductible plans for 2016, the firm put some of the $1 million it saved into the new health savings accounts that employees could use to cover their out-of-pocket expenses before reaching the deductible. Employees could also contribute to those accounts to save money for medical expenses. This year the deductibles on those plans are $1,850, $2,700 and $3,150 for single coverage, and $3,750, $5,300 and $6,300 for family plans.
The company put a lot of effort into educating employees about how the new plans worked, said Schmidt. Premiums are typically lower in high-deductible plans. But under federal rules, until people reach their deductible, the plans pay only for specified preventive care such as annual physicals and cancer screenings and some care for existing chronic conditions.
Enrollees are on the hook for everything else, including most doctor visits and prescription drugs. In 2020, the minimum deductible for a plan that qualifies under federal rules for a tax-exempt health savings account is $1,400 for an individual and $2,800 for a family.