Effect on premiums 'relatively small' when expanding pre-deductible coverage to HSA plans, study finds

The effect on premiums when pre-deductible coverage was expanded to 14 services in HSA-eligible health plans ranges from virtually nothing to 1.5 percent, according to a new study from the Employee Benefit Research Institute.

The study published May 19 analyzed the effects of a 2019 Internal Revenue Service notice that increased the flexibility of health savings account-eligible health plans to cover 14 services to prevent the exacerbation of chronic conditions before a patient meets their deductible.

The study used 2018 data from two IBM claims and health plan databases, including members' health insurance eligibility information and medical pharmacy claims. The final sample size was 1.6 million individuals with employer-sponsored, HSA-eligible policies.

Seven key takeaways:

  1. When pre-deductible coverage was expanded to 14 preventive services in HSA-eligible health plans, premiums increased 0 to 1.5 percent.

  2. No increase in premiums is expected when deductibles replace coinsurance, when the use of healthcare services is assumed not to increase because of lower cost-sharing and when members' related diagnoses are required.

  3. Premiums increased 0.9 percent when healthcare services were assumed to increase because of lower cost-sharing and when employers did not impose cost-sharing.

  4. Premiums would increase by 1.5 percent if all 14 services were excluded from pre-deductible coverage with no cost-sharing, there was an increase in the use of healthcare services and the services were covered regardless of a related condition.

  5. The reason premiums did not rise significantly is because the percentage of members with any of the diagnoses mentioned in the IRS notice is low. Because of that, use of the 14 services is also low, especially among members with a related condition. 

  6. Another reason for the low rise is because the cost for nearly all 14 services is low when spread across the entire population. Users of the 14 services access care more often because of their health conditions and often meet their deductible. As a result, even when coverage for services is provided pre-deductible, these users are likely to meet their deductible. Employers could get back the cost sharing by imposing a pre-deductible copayment or coinsurance.

  7. The Chronic Disease Management Act, reintroduced in Congress in May 2021, would provide HSA-eligible health plans more flexibility to provide pre-deductible coverage for services that manage chronic conditions.

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