Health Savings Accounts on the Rise
The utilization of health savings accounts (HSAs) is rising, creating a win-win for employees, employers, and HRO benefits providers. Let’s take a look at the results of two recent studies to find out why.
Buck Consultants conducted a survey (http://bit.ly/uu10es), commissioned by its parent, ACS, A Xerox Company, which revealed that HSAs are not only saving employers and consumers money, but also helping employees (and retirees) make better decisions about their healthcare. Consumers of HSAs are putting aside more money for potential medical costs than they did before (69% of those enrolled in High Deductible Health Plans [HDHPs] contributed an average of $1,000 to their HSA accounts for individual coverage, and $1,500 for family coverage). They are also engaging in healthier lifestyle choices and doing more research for preventative care. Employers report that the cost of providing an HSA-qualified plan is less than that of a standard Preferred Provider Organization (PPO) plan. You might be thinking, this is good for the employer, but what does the employee think? Well, 72% of account holders chose the HSA-qualified plan even though they had other plan options, and 82% said their selection was based on the ability to save tax-free money.
According to the results of a survey released by Mercer (http://bit.ly/vZiiFL), due to the rising cost of healthcare plans and cost per employee, employers are taking action to try and keep costs down, e.g. nearly a third with 500 or more employees offer consumer-driven health plans, i.e. HDHPs linked to HSAs or health reimbursement accounts, up from <25% in 2010. Because of the high deductible to the employee, they cost less than other plans, around 20% less per employee than a PPO.
Here are two examples of leading benefits administration vendors helping their clients:
- ACS, one of the first providers to implement an HSA in 2004, has 25,000 employer implementations and $1 billion in HSA assets
- In 2010, Fidelity increased its number of HSA clients by >50% while adding 22,000 new indiviudal HSA accounts.
Providers can help with further education. Focusing on employees, I myself did not understand HSAs at first. I’m in my fourth year of having an HSA combined with my HDHP. First, let me say that I’m not the HSA spokesperson and there are pros and cons to any plan that need to be evaluated on an individual basis. The upside for those not familiar – speaking for my HDHP consumer-driven health plan I opened an HSA with – is that there are no co-pays and no forms to fill out. Preventative care is free, e.g. annual physicals. So if you are healthy, there are no costs except your monthly premium. But if you do get sick and need to go to the doctor, you pay out of pocket until the annual deductible is met, then in-network pays a high percentage until you reach your annual yearly max—that just happens to be approximately the same as the annual max I can contribute to my HSA; and like an IRA, the amount you contribute is deductible on your income tax.
HRO providers that can help clients navigate through the intricacies of healthcare will be greatly valued!
Gary Bragar, HRO Research Director, NelsonHall
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