Enrollment in health savings accounts grew 18 percent last year as employers continued to steer workers into high-deductible medical plans, an insurance group said this morning.
HSA membership rose from 11.4 million in January 2011 to 13.5 million in January 2012, with most of the growth occurring in plans offered by large employers, according to an annual census by America’s Health Insurance Plans, an industry lobby. Since 2008 HSA membership has more than doubled.
Created by legislation in 2003, HSAs let employers and workers make tax-free contributions to finance out-of-pocket medical costs. They differ from the better-known flexible-spending health accounts because with HSAs unspent money can be rolled over from one year to the next. Leftover money in flex accounts reverts to the plan sponsor.
Also, HSAs always are paired with high deductible insurance coverage — at least $1,200 for individuals and $2,400 for families. Deductibles are what patients spend before insurance kicks in. The idea behind HSAs is to contain medical inflation and make patients smarter consumers by giving them a bigger stake in health-care purchases. Critics, however, contend that such “consumer-directed” health plans are simply a way for employers to shift costs to workers.
Today’s AHIP report doesn’t include health reimbursement arrangements, another kind of spending account that’s usually paired with a high deductible plan. Last year 17 percent of U.S. workers with employer-based insurance were enrolled in an HSA or an HRA, according to the Kaiser Family Foundation. (KHN is an editorially independent program of the foundation)
States with the highest portion of HSA enrollees were Vermont, at 20 percent; Minnesota, with 14 percent; and Montana and Utah, both with 12 percent. Fifty-nine percent of HSA enrollment was in large-group plans, up from 55 percent last year. AHIP surveyed 97 insurance companies for its census.
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In my 2011 article on HSAs, I reported that a growing number of employers are not contributing to employee health savings accounts, making those accounts — which are supposed to be there to defray the large out-of-pocket costs — increasingly theoretical.
http://managedhealthcareexecutive.modernmedicine.com/mhe/Benefit+design+and+pricing/HSAs-keep-slow-but-steady-pace/ArticleStandard/Article/detail/719367
We have a $2,500 deductible with our family plan but no HSA is offered. The employer contributes nothing towards a HSA nor can I. This negates the benefit of having a high deductible health insurance policy when no tax exempt contributions can be made. I do understand the employer wanting to save money, but not allowing my family to contribute makes it even more difficult financially. Apparently the insurer charges more for administering the HSA, which is why the employer refused to offer it. Regardless, the growth in HSAs highlights the financial strain being placed on employers that want to continue providing health insurance to their employees.
Valleri, just open an HSA at a local bank. You don’t have to go thru your employeer to enroll in HSA, as long as you meet the deductible, max out of pocket limits you can enroll set up a HSA.
@Valleri – I like Brian’s can do attitude, but check into this as not all HDHP’s are HSA enabled.
The majority (1.6m) of the nominal increase (2.4m) in HSA’s was driven by the Large Group Market. These are companies with 50+ employees. I would really like to know the breakdown of people that elected HSA’s because of their advantages vs. those that had an HSA ‘forced’ on them by the company.
I would also really like to know the % of people who actually open and contribute to an HSA.
For a full discussion of HSA’s and their benefits, check out this article: http://www.hsaedge.com/2012/05/28/what-is-a-health-savings-account-hsa/
@Vallleri- Brian’s advice. many local banks will administer an HSA at no cost. Larger banks charge a small monthly admin fee, but offer more robust investsment options. But, before you go that route, make sure your plan is HSA compliant. The deductible is high enough, but does it have any copays, like an Rx copay? Some employers cling to the Rx copay as a means to offer better coverage, but that makes the plan non-HSA eligible. So, check that first.
I often remind people that HSAs are for people who wish to leverage their health for financial gain. One has to have the money to fund the account. And the self discipline to do it.
One has to have the attitude that the money in an HSA is for spending on health concerns. The incentive is to put things off to hold on to one’s money.
Another read on the HSA is that the American people are irresponsible in their healthcare choices and they need this “skin in the game” to reign in their over-the-top usage of the healthcare system. When they spend their own money they will think twice.
I offer this. HSAs are a clever way to reduce premiums for employers. They do this by shifting costs to the employee. Like any product on the market, it is suitable for a small slice of very healthy people who are good savers and wish to take advantage of tax savings.
The only reason an HSA can even exist is because true free market forces are impotent when it comes to health insurance. Hey, in a true free market, we could not buy insurance at all.
But since we can’t do that, we are at the mercy of all these “wonderful new insurance products that are going to give us so much freedom and choice and allow us to take personal responsibility. ”
HSAs are not the answer to 50 million uninsured and 25 million uninsured of this first-world country that ranks dead last in health outcomes for first-world countries.