Are employees getting fed up with high-deductible health plans?

Every open enrollment, employees stare at a list of health plans, often only paying close attention to just how much the plan will take from their paycheck each month. It's no surprise that high-deductible health plans (HDHPs), which typically boast lower premiums and, hence, lower monthly costs, have gained popularity in the past few decades.

But is that popularity finally waning? 

According to ValuePenguin, a financial resource platform by LendingTree, HDHP enrollment has dropped by 2%, the first decline since 2013. While nearly 56% of American private-sector workers were enrolled in HDHPs as of 2021, that number fell to just under 54% in 2022, marking a small but possibly significant shift in U.S. healthcare. Overall, 32 states saw decreased HDHP enrollment.

Read more: Why healthcare literacy is key to financial wellness

"The decline wasn't very dramatic," says Divya Sangameshwar, insurance expert at ValuePenguin. "But it shows that employers in those states likely have started offering more healthcare options to their employees. There hasn't been a specific legislation that would have driven this."

Notably, large employers seem intent on offering a more diverse array of health plans. In 2018, 22% of employers with 20,000 employees or more offered only HDHPs — that number dropped to 9% in 2022. Sangameshwar points out that HDHPs can ultimately be a harmful financial decision for both employers and employees: A high deductible means an employee likely has to pay thousands of dollars out-of-pocket before the insurance carrier begins sharing the costs of care. If an emergency occurs and an employee doesn't have enough saved up, they may find themselves incurring debt. Employees may avoid seeking care altogether because of costs, leading to deteriorating health and less productivity. 

Read more: How much longer can employers endure rising healthcare costs?

According to exclusive research by EBN's parent company Arizent, employees with HDHPs are 30% less confident they will know what their healthcare costs will be, at least most of the time, compared to employees with preferred provider organization plans, or PPOs, which usually have lower deductibles. Unsurprisingly, Arizent found that 70% of HDHP users found their healthcare costs too expensive, versus 50% of PPO users.     

Sangameshwar advises employees to refrain from picking a health plan based on premium alone and consider what plan will best fit their health and financial needs. 

"It's really important for employees to do their research and do the math: What can they afford, and how much coverage they're going to get out of the high deductible health plan?" she says. "I personally have heard of stories of friends and family who pick the cheapest health plan and then discover that they couldn't get the medical care they needed. So they start skipping their medical care."

Read more: Why employers can't afford to stick with a traditional healthcare model

Sangameshwar emphasizes that not all HDHPs are built the same. For the IRS to consider the plan as having a high deductible, it has to be at least $1,600 for a single coverage plan and $3,200 for a family plan. If an employer is offering an HDHP with a deductible that hovers closer to the minimum and a health savings plan (a tax-advantaged medical savings account for those enrolled in HDHPs) with a substantial employer contribution, then employees may find those plans worthwhile. 

"Make a list of personal medical requirements, including mental health and prescriptions you require," says Sangameshwar. "Study the plans available to you and pick the plan that makes sense."