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Small Business Digest


Small Business Leaders Report Growing Success With Consumer Driven Health (CDH) Benefit Programs

A majority of smaller companies (54%) surveyed by Information Strategies, Inc. (ISI), recently said they were either contemplating or already had adopted a consumer directed health (CDH) offering for employees.

At the same time, ISI found that nearly half (46%) of all individuals who responded to its monthly surveys were thinking of purchasing a Health Savings Account (HSA) offering or are already participating in another CDH program.

These figures are nearly double those of 2007 and appear to indicate a clear trend toward acceptance of programs that offer higher deductibles and/or other benefits.

Of note also: 14% of all respondents said they were participating in a wellness program, either through their company or as an individual.

The poll of 1,024 small business leaders was conducted in October and early November as part of ISI’s annual study of small business operations.

Four factors leading companies to choose a CDH plan were revealed by the survey:

  • Reduced costs, both in terms of premiums and resource usage
  • Greater employee acceptance, understanding
  • Ability of employees to save for medical emergencies and/or retirement
  • Positive feedback from other employers

That last point seemed key for many. Respondents said they were hearing good feedback about the programs from other managers, with 34% of respondents citing this as the major factor in their decision.

Preliminary expectations from health insurers such as UnitedHealthcare point to continued growth in HSA programs in 2009.

Based on the survey and industry feedback, ISI predicts that the number of enrollees with Health Savings Account offerings will double by the end of January 2009 from January 2008 levels.

At the same time, Health Reimbursement Accounts are also growing with those numbers expected to grow in 2009.

Five factors cited by respondents influenced the ISI projections:  

  • Better premium rates for CDH offerings
  • Improved information resources
  • Easier monitoring programs
  • More robust offerings including wellness
  • Employee request for CDH products

These factors were mirrored at a recent focus group convened by ISI, where a roundtable discussion about small business healthcare benefit needs revealed a desire for more plan options, reduced costs, improved information sources and monitoring tools.

Participants said they had found that employees reacted more positively to CDH offerings when the groundwork was laid during the year.

All roundtable participants agreed they needed to spend more time installing these programs but the effort was rewarded with lower costs and higher employee morale.

Said one Midwest manufacturing executive, “my workforce is predominantly Hispanic and several staffers came to me asking for an HSA. We had thought about it but were concerned about the language barrier preventing us from adequately explaining the new offering.”

He reported 55% participation by his plan workers when the materials were translated into Spanish and presented by a Spanish-speaking HR person.

“Quite frankly, we were surprised at the acceptance but saved almost 11% on our benefit costs even with a $500 contribution to the first year’s deductible,” he added.

Other participants talked about their experience getting quotes and making the changes in the plan.

They all reported that their agent in prior years had discouraged HSAs but that this year all of them received initial proposals that included an HSA option.

Said one retail HR executive, “we put in the new plan at the same time we were closing five stores and it mitigated some of the sting for our remaining employees,” she reported.

All participants said they experienced some reluctance on the part of employees but felt the “pain” of change was worth the effort.

Of the seven participants, four had installed either an HSA or HRA offering with two using full-replacement and two offering the CDH plan as an option.

At the same time, the three other participants outlined why they had opted to wait a year before moving ahead.

The panel was sponsored by ISI as part of its ongoing research of the small business marketplace.

Two of the participants said their toughest sell was to senior management but that they were convinced that all managers needed to participate in order to make the transition work.

“My CEO was not happy to give up his old plan but he went along with us when we said he had to participate,” reported one participant.

© 2016, Information Strategies, Inc.
P.O. Box 315, Ridgefield, NJ 07657