The Status of High Deductible Health Plans with Savings Option

Updated 11/22/2021:  This article has been updated to correct a statistic in order to indicate that large firms on average contributed $16,132 to the employee premium and $937 to each family’s health savings account. A previous version swapped these and said that the $16,132 went toward the health savings account and the $937 went toward employee premiums. As of 2020, employers can contribute no more than $7,300 to health savings accounts.

Large employers continue to pursue high deductible health plans with savings option, such as a health savings account or a health reimbursement arrangement, according to a section of the Kaiser Family Foundation (KFF) 2021 Employer Heath Benefits Survey.

Employer coverage through high deductible health plans with a health reimbursement arrangement, a high deductible plan with a health savings account, or both makes up a little less than a quarter of all employer coverage. Large employers with a minimum of 200 employees are more likely to offer high deductible health plans than small employers.

Interest in high deductible options has fluctuated over the past decade, but 2021 offerings continue a downward trend that started in 2018.

Large and midsized employers continue to lead the way in high deductible health plan adoption. Two-thirds of large employers offered a high deductible health plan with a savings option along with nearly six out of ten midsized employers (56 percent). Meanwhile, only 20 percent of small employers with 199 employees or fewer offered high deductible plans with savings option.

As a result, less than three out of ten covered employees were in a high deductible health plan with a health reimbursement arrangement or health savings account (28 percent). 

However, the small business world was less invested in high deductible health plans. Employees in small businesses have been increasingly less likely to enroll in one of these types of plans and 2021 continued that trend. Less than a quarter of small business employees enrolled in high deductible health plans with a savings option, perpetuating a decline that started in 2018.

Meanwhile, employees at large companies also saw a decline in uptake of high deductible health plans with savings accounts after more than a decade of fairly consistent growth, although experts did not mark this decrease as statistically significant. The share of large company employees that enrolled in these plans dropped to 30 percent after hitting 33 percent in 2020.

For both high deductible health plans with savings option and plans that are not high deductible health plans with savings option, premiums have been steadily rising since 2008. The pressure of rising premium costs has been adding more weight to the urgency of healthcare reform.

However, employees who chose to enroll in high deductible health plans that qualified for health savings accounts saw significant savings on premium costs in contrast to employees that did not enroll in high deductible health plans with savings option. 

On average, for high deductible health plan enrollees, premium costs added up to a total of around $6,877 for individuals and $20,507 for families. Employees in high deductible health plans with health reimbursement arrangements had average premiums equalling $7,441 for individuals and $21,662 for families and employees contributed $1,569 or $6,407 for individuals or families, respectively.

More employers (17 percent) lean toward offering a high deductible health plan that qualifies for a health savings account, as opposed to one that is combined with a health reimbursement arrangement (six percent).

In the webcast coverage of the report, Matthew Rae, associate director of KFF’s program on the health care marketplace, emphasized the rapid escalation of deductibles between 2006 and 2018, an increase that continued into 2021. Deductible growth surpassed not only premium costs but also wage growth. 

Rae pointed out that the increased interest in health savings accounts accompanied this deductible growth. As employers shift more financial responsibility to employees by raising deductibles, employers can create and contribute to the health savings account in order to soften the impact of that increased cost-sharing.

In 2021, large employers that offered high deductible health plans with a health savings account on average contributed $16,132 to the employee premium and $937 to each family’s health savings account, with the employee contributing $4,521 to the premium. In smaller firms, the employer contributed less to the health savings account but more to the premium.

However, health savings accounts are not a perfect solution for all employers, Rae noted.

“Part of the issue with HSA-qualified plans is that they have other restrictions that the employer may or may not want to make, other federal rules or requirements that they have to have to meet to make the plan HSA-qualified,” Rae said.

High deductible health plans can be controversial, as some experts have found that these plans create cost barriers to care. In response, some studies have called for better health savings account education for employees.