2017 Employee Benefits Trends - PPO vs. HDHP

Blurred Lines: HDHPs and PPOs Looking More Alike

The two leading employer-sponsored health plan options may go by different names, but, increasingly, they both appear to mean the same thing for employees...

Higher and higher costs.

The latest analysis of benefits enrollment data from large employers using the BENEFITFOCUS® Platform reveals that the majority of employees selected either a traditional PPO plan or a high-deductible health plan (HDHP) for 2017.

These two plan types have typically distinguished themselves from each other in the trade-off between the price of premiums and out-of-pocket costs. PPO subscribers pay more up front in premium for the benefit of paying less when they use health care services, while HDHP subscribers experience the inverse.  

But that dichotomy appears to be fading.

According to the 2017 enrollment data, HDHP premiums are starting to look more like those of PPOs, and PPO out-of-pocket costs are starting to look more like those of HDHPs.

Year-over-year, PPO subscribers experienced negligible premium increases (roughly 1 percent), but HDHP subscribers saw their premiums rise by up to 12 percent - several times the annual rate of inflation. The average employee enrolled in a family-coverage HDHP now has to pay over $3,100 in annual premium, plus a deductible of over $4,400.

 

And while HDHP deductibles have hardly risen from 2016, PPO deductibles are up to 9 percent higher. In addition to their $4,300-plus annual premium, PPO family-coverage subscribers are responsible for an average of more than $2,400 before insurance kicks in. That may still be much lower than the average HDHP deductible, but it's actually less than $200 below the threshold the IRS has set for a plan to be considered an HDHP.

 

It seems that, one way or another, practically all employees are picking up more of the tab for their health care. Whether they're in a PPO or an HDHP, they're taking on a significant financial burden. And they need help managing it.

As employers continue to shift health care costs to employees, employers need to make sure they're providing resources that soften the impact, or else risk finding themselves with a sick, stressed, unproductive and dissatisfied workforce. These resources may include:

  • Tax-advantaged health spending accounts (e.g., HSAs, FSAs, etc.)
  • Cost-effective supplemental coverage in the form of voluntary benefits, such as accident and critical illness insurance
  • Digital health services that offer a cheaper alternative to in-person care 

Click here to receive your free copy of Benefitfocus' State of Employee Benefits 2017 report!