Average Employer PPO Deductible Doubles

The median deductible for employees with individual coverage in PPO employer health plans jumped to $1000 in 2008, up from $500 in 2007 and $250 in 2000, according to the National Survey of Employer-Sponsored Health Plans, an annual report released on November 19 by Mercer (Figure). This significant increase was found among traditional PPOs, the most common type of plan (covering 69% of insured employees). Nearly four-fifths (79%) of employers imposed a deductible for PPO coverage in 2008 compared with about half (52%) of employers in 2000. For the survey, approximately 2900 private and public employers with 10 or more employees were interviewed in August and September.

Figure. Median deductibles for individual coverage in PPO health plans doubled from $500 in 2007 to $1000 in 2008. Source: Mercer. National Survey of Employer-Sponsored Health Plans; 2008.

PPO deductibles were lower among larger employers. In companies with 500 or more employees, the median PPO deductibles for individual and family coverage were $300 and $800, respectively.

Health plan costs for employers rose by 6.3% in 2008, which was slightly higher than the 6.1% annual increases from 2005 to 2007. Employers expect a similar increase (6.4%) in 2009. The average total health benefit cost per employee enrolled in a PPO was $7815 in 2008, up from $7352 in 2007. The average total health benefit cost for an employee enrolled in an HMO was $7768 in 2008 compared with $7120 in 2007. For an employee enrolled in a consumer-directed health plan (CDHP), the average total health benefit cost was $6207 in 2008, up from $5970 in 2007. Of the 2 types of CDHPs, health savings account–based plans were less costly than health reimbursement arrangement–based plans, with average annual per-employee costs of $6027 and $6420, respectively.

The number of large employers (with 500 or more employees) that offered CDHPs rose sharply to 20% in 2008, up from 14% in 2007. CDHPs were most common among the very large employers (with 20,000 or more employees), of whom 45% offered such plans in 2008, up from 41% in 2007. Among smaller employers, just 9% of employers with 10 to 499 employees offered CDHPs in 2008, up from 7% in 2007.

More employers gave employees incentives to participate in wellness programs. Among very large employers, 45% provided incentives in 2008, up from 38% in 2007 and 32% in 2006. More than one-fourth (26%) of large employers provided incentives in 2008, up from 23% in 2007 and 19% in 2006.