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Pennsylvania’s employers continue to favor self-funded insurance plans and more employers than ever are offering their employees Health Savings Accounts to pay for qualified medical expenses, according to a recent survey.
Harrisburg-based financial advisory firm, Conrad Siegel, recently released its annual Medical and Prescription Drug Survey. The survey was conducted by the firm late last year and was answered by 104 organizations, 82% of which were from the midstate.
While the survey’s results pre-date the COVID-19 pandemic, Rob Glus, a partner and consulting actuary at the firm, said he has yet to see businesses change their health plans as a result of the pandemic.
“A lot of people are furloughing and laying off their employees but the longer this lingers economically, the more chance that there will be for businesses to look at permanent layoffs and bigger changes to their health plans,” he said.
Possibly the biggest change from the firm’s last survey was a jump in the number of employers who said they offered HSAs to their employees, which increased from 32% to 45%. HSAs are savings accounts that let employees set aside untaxed dollars for deductibles, copayments, coinsurance and other expenses.
Glus expects the number of employers offering HSAs to continue to grow since they can only be contributed to if an employee has a high-deductible health plan and the average deductible is much higher than it was years past.
“Now that deductibles are high enough, businesses ask: ‘why wouldn’t I offer an HSA as an alternative to my employees to give them a potential tax savings mechanism to save on their health care?’” he said.
Last year’s survey showed a large jump in the number of employers who shifted from fully-insured arrangements to self-funding — 49% to 58%. This year, that number plateaued at 57%.
Under a self-funded arrangement, an employer takes on more risk by paying the cost of any claims plus an administrative fee.
“Self-funding is a long term play to cut out these administration costs out of your medical program,” Glus said. “If you have the financial wherewithal, it can be a real cost saver.”
The survey also showed that more than half of companies do not offer coverage to spouses who have access to insurance through their employer, and 41% have some form of spousal coverage provisions. If the employee’s spouse still chooses to be covered under spouse’s plan, the average surcharge was $2,551 a year.
“It has always been a struggle for public employers with rich plans,” Glus said. “Everyone else is making changes and if you aren’t, it is too easy to accept all of those people on your plan.”
A smaller change in the survey from last year was an increase in the number of companies offering co-insurance as opposed to copay-based prescription drug programs, meaning that an employee would have to pay a percentage of the cost of a prescription rather than a set copay.