perian Protection USA Inc. in Smithfield, R.I., is offering financial incentives to encourage more of its 1,600 U.S.-based employees to enroll in its consumer-driven health plan this year, according to Michael Vittoria, vice president of human resources.

    The plan has deductibles of $1,150 for individuals and $2,300 for families. However, Sperian will contribute $250 to each individual employee's health savings account and $500 to family HSAs, bringing those deductibles down to $900 and $1,800, respectively.

    The lower payroll contribution sweetens the deal even further. Single PPO coverage costs employees $28 per week, compared with just $13 per week for the CDHP, saving the employee $780 annually and effectively reducing their deductible to just $120.

    For families, the premium differential between the PPO plan and the consumer-driven health plan is $30 a week, saving the employee $1,560 annually and bringing that deductible down to $240 for the entire family.

    If that's not enough, Sperian is going even further by making the company's HSA contribution in January so that employees can access those funds immediately, if necessary. In addition, the company pays 100% of the cost of coverage above the deductible amounts, rather than the customary 80/20 split most PPOs and CDHPs have. The company also pays 100% for the cost of most preventive care services such as annual physicals, mammograms for women over 40 and colonoscopies for employees over 50.

    "This takes away some of the apprehension," Mr. Vittoria said.

    Sperian is undergoing open enrollment, so it's not yet known if the current incentive programs are working. But Sperian's incentives, which have been offered for two years running, helped to increase its CDHP enrollment to 30% from 23% in 2007.

    But Mr. Vittoria would like to see that percentage rise even more, so the company this year added a stick to its existing carrots. Employees and covered spouses who fail to both take a personal health assessment and receive an annual physical will be enrolled, by default, in a new, less generous health plan with even larger deductibles and no HSA, Mr. Vittoria said. That option, called the "Classic Plan," has deductibles of $2,000 for individuals and $4,000 for families.

    Why are employers so adamant about getting more of their employees to enroll in consumer-driven health plans? Because it saves them money—so much money, in fact, that it provides funding for the incentives, according to Mr. Vittoria.

    He said that in 2004, when Sperian's PPO coverage came up for renewal, it was facing a 37% premium increase, which would have raised the total cost for employee health care coverage to the manufacturer to $9.8 million annually from $7.1 million previously.

    By contrast, the CDHP—even though less than a third of its employees are currently enrolled—has kept Sperian's annual rate of increase down to the low single digits. Mr. Vittoria is projecting an increase of just 1.8% for 2008, down from 2.6% in 2007 and 3.6% in 2006. Some critics of CDHPs, and some early research, have found that the plans tend to attract younger, healthier employees.

    While that may be so, there hasn't been a significant enough disparity to cause adverse selection for Sperian, according to Mr. Vittoria.

    "We have people with multiple sclerosis in our HSA, and they get $1,000 injectibles," he said. "They know they have this upfront deductible, but they also know they have 100% coverage after they hit that deductible. This provides incentives for people to manage their chronic conditions."

—Crain's Benefits Outlook Online,  December 2008