November 13, 2019

HDHP/HSA Pairing Is Gaining Momentum

By Curtis Farmer, Alliance Benefits

Some wonder or ask why we offer a single high deductible health plan (HDHP) paired with a health savings account (HSA). As many know, the employee benefits landscape in recent years has been transformed by the rapidly increasing costs in healthcare. As a result, employers are searching for various ways on how to manage the health coverage portion of their overall benefits programs. The term “high deductible health plan” often carries with it a negative connotation but has been gaining momentum as a popular alternative to traditional health plans among both employers and employees. There are countless reasons why offering a HDHP/HSA pairing is becoming an attractive and stable option for employers.

With health premiums soaring, many employers are left with asking their employees to either carry more of the financial burden, reducing benefits offered, or cutting benefits entirely due to the unmanageable high costs. Yet while health insurance may use up a significant portion of an employer’s revenue, health benefits are important and what prove to often attract new employees and help retain existing workers.

Enrollment in High Deductible Health Plans has grown from 17.4% to 46% in just 11 years

The solution for many employers has been to choose a High Deductible Health Plan paired with an HSA. According to a recent article from SHRM covering research from the Employees Benefit Research Institute (EBRI), enrollment in an HDHP promotes more conscious health-care purchase decisions. For example, 55% of employees enrolled in an HDHP checked whether their health plan would cover their care or medication. Only 41% of employees enrolled in a traditional health plan did the same. These decisions ultimately can lower overall health-care costs and thus annual premiums for employers.

While HDHPs may carry a negative stigma, they are steadily breaking free of this reputation. Statistics from the federal Centers for Disease Control and Prevention indicate the combination of an HDHP with an HSA is increasing in popularity. In 2007, 17.4 percent of employees under the age of 65 were enrolled in an HDHP; in 2018, that number jumped to 46 percent, with half of those people also enrolled in an HSA.

Pairing an HDHP with an HSA offers a good solution to increasing health-care costs and can also provide retirement saving incentives complimenting an employee’s 401(k) or 403(b) plan. An HSA offers triple-tax savings by allowing:

  • Pre-tax or tax-deductible contributions
  • Tax-free interest and investment earnings
  • Tax-free distributions, when used for qualified medical expenses

Further appeal for employees is the ability for an employer to also contribute tax-free HSA dollars to their account. As an example, the Alliance Health Plan has a built-in employer monthly contribution which equates to half of the annual medical and prescription deductible. This gives the employer not only the opportunity to provide current health-care coverage for their employees, but potentially assist them in saving toward their future. HSA balances roll over from year to year, belong to the employee regardless, and can be used even after retirement.

The Alliance Health Plan first implemented a HDHP/HSA product solution in 2016. Since 2018, annual premium increases have remained below 5% (3% for 2020) with no reduction in benefits or increases in deductibles and out-of-pocket maximums. Instead, we’ve seen an improvement in benefits with the addition of telemedicine services, enhanced vision and dental care, and by offering a Loyalty Rewards premium discount program for employers who remain on the plan year after year.

As we reflect over these past few years, we praise God for his provision and for the wisdom and prayer that went into making these difficult but crucial and timely plan changes. If you have questions or would like more information about the Alliance Health Plan, we encourage you to contact Alliance Benefits.

If not yet enrolled, be sure to check out our new quote tool to see if the Alliance Health Plan might be a good fit for your church!

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Curtis joined as Director for Alliance Benefits in September of 2017. He is responsible for the overall administration and direction of all aspects of Alliance Benefits, including the health and retirement plans for Alliance workers in the United States and internationally. His desire is to serve our districts and churches in helping to care for our pastors and staff.

Posted in: Health Plan Tools