HSA Enrollment Rises Even As Full-Replacement Strategies Decline

In an earlier post on results from the 2019 Mercer National Survey of Employer-Sponsored Health Plans, we reported that some employers that had offered high-deductible plans with health savings accounts (HSAs) as the only type of medical plan reversed course and added traditional PPO or HMO plan options. This trend was especially notable among the largest organizations (20,000 or more employees), where the percentage of employers offering only high-deductible account-based plans fell from 22% to 16%.  

The repeal of the ACA’s Cadillac tax may result in more employers pulling back from a full-replacement strategy, especially those that felt pressured by the threat of the tax to make a bigger move than they would have otherwise. Employers are right to be concerned about healthcare affordability, especially for their low-wage workers. For employees with little savings or significant health issues, a high-deductible plan simply may not be a good fit. As employers work to meet the different needs and budgets of today’s five-generation workforce, offering an array of health benefit plans has clear advantages.

While full-replacement strategies waned, we saw no evidence that HSA plans are going away.  Many employees who do the math at open enrollment find an HSA is a smart financial move. Lower paycheck deductions and employer contributions to the employee-controlled accounts can offset the higher deductible, while the HSA offers a tax-advantaged savings opportunity. Even as some employers backed away from full-replacement strategies, enrollment in high-deductible account-based plans rose from 33% of all covered employees last year to 36% in 2019. These plans are offered by 71% of large and midsize employers, up from 68% in 2018, and by 37% of small employers. 



Survey data shows that enrollment continues to grow over time when employers offer an HSA-eligible plan as a choice alongside PPOs or HMOs. Among large employers that have offered an HSA-eligible plan for at least three years as a choice, average enrollment grew from 31% in 2017 to 37% in 2019. When employees can “vote with their feet,” a lot of them vote for HSAs.  

Beth Umland
by Beth Umland

Director of Research, Health, Mercer

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