Premiums the big factor in health plan enrollment

For employers looking to drive more workers to sign up for health savings account (HSA)-eligible health plans, one of the biggest financial incentives they can offer is to reduce or even eliminate the annual premiums, according to recent research from the Employee Benefit Research Institute (EBRI). EBRI examined the administrative data from the health plans of two large employers from 2011 to 2014 to determine the extent to which financial incentives, such as $0 premiums, encouraged enrollment in an HSA-eligible health plan, and whether the incentives affected risk selection in the plans.

“Clearly, workers and their families are highly sensitive to health insurance premiums,” said Paul Fronstin, director of EBRI’s Health Research and Education Program. “Understanding what drives enrollment in HSA-eligible health plans is important to plan sponsors, since enrollment in these plans is expected to grow.”

The study found the following:

  • Health insurance premiums are a major driver of plan choice. After eliminating employee premiums for all coverage tiers, HSA-eligible health plan enrollment increased from 4 percent to 25 percent among individuals with employee-only coverage and from 2 percent to 31 percent among individuals with family coverage.
  • Healthier-than-average employees are enticed by $0 premium for an HSA-eligible health plan. Offering coverage with no payroll deduction attracted individual enrollees who were marginally healthier than those who would have enrolled without this financial incentive in place, therefore not mitigating adverse selection as anticipated.

The analysis did not find strong evidence that suggests the positive risk selection routinely reported in HSA-eligible health plan enrollment was moderated by eliminating the premium. While there is weak evidence that prior users of health care services were more likely to enroll in the HSA-eligible health plan as a result of the elimination of premiums, for the most part, the findings are to the contrary. In summary, EBRI found that the financial incentive drew new individuals and families into the HSA-eligible health plan who were on average healthier than those who would have entered without the incentive in place.

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