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May 31, 2006
CO Division of Insurance Releases On-Line HSA Brochure
The Colorado Division of Insurance has just released a new on-line brochure designed to educate consumers about increasingly popular Health Savings Accounts (HSAs). An HSA is a special account owned by an individual where contributions to the account are to pay for current and future medical expenses. These accounts can be interest bearing or earn income on the invested money. Funds in the account roll over from year-to-year. HSAs are used in conjunction with a “High Deductible Health Plan” (HDHP) offered on an individual basis or on a group basis through an employer. The high deductible feature often makes HSAs less expensive than traditional health insurance plans.
“At a time when consumers are struggling to purchase or even hold onto their health insurance, HSAs are proving to be an affordable and increasingly popular option for Coloradans,” Insurance Commissioner David Rivera said. “The brochure released today answers consumers’ questions about this exciting product that many Coloradans could benefit from.”
A survey by Colorado-based Mountain States Employers Council Inc. found that premiums for HSA plans are about 30 percent lower than HMO and PPO plans. The Division of Insurance has found that the number of individuals covered by HSAs in Colorado’s health insurance market for small businesses increased from 1,075 in 2004 to more than 26,000 in 2005.
These findings are similar to those from national surveys, including one by Deloitte Center for Health Solutions, which found that the cost of the average health insurance plan increased by 7.3 percent in 2005, while the cost of HSA and other consumer-driven health plans went up by only 2.8 percent. America’s Health Insurance Plans (AHIP) determined that nationally the number of people covered by HSAs tripled in less than one year from about 1 million individuals in March 2005 to about 3.2 million in January 2006.
Health Savings Accounts also have proven to be popular with the previously uninsured and with middle-to-lower income families. It has been reported that 41 percent of purchasers of HSA plans were previously uninsured and 45 percent earned $50,000 or less annually.
Consumers can access the Division’s HSA brochure by visiting www.dora.state.co.us/insurance and selecting the “Publications” link.
Learn more about Health Savings Accounts at HSA for America and find more HSA Special Reports.
Posted by Wiley Long at 09:34 AM | Comments (0)
May 29, 2006
Wisconsin Health Savings Account Update
Wisconsin is one of only six states that do not give a tax deduction for money put into a Health Savings Account (HSA). A bill was recently passed in Wisconsin that would give the citizens of that state the same deduction that most other Americans are allowed. However, Gov. Jim Doyle (D) decided to veto this bill.
Though the federal government allows consumers to deduct their HSA contributions from federal taxes, Wisconsin is one of only six states that does not give the same break on state taxes. In 2004 Doyle vetoed an earlier bill the legislature passed to create such a tax credit.
"Our goal is to create a more consumer-driven health care system in Wisconsin, and the first step has to be having access to HSAs," said Sen. Alberta Darling (R-Milwaukee), who sponsored A.B. 4 in the Senate. The bill passed on an 18-14 vote April 25; the General Assembly had passed it 60-36 in February.
"HSAs help people become more motivated," Darling said. "It's their money, and then they become more savvy consumers of health care, because they have a vested interest in it. That will change health care in Wisconsin, because we have some of the highest costs in the country."
The HSA bill would have given state residents a 6.5 percent credit for the amount they claimed as HSA contributions on their federal taxes. But critics, including Doyle, called the tax breaks "elitist," claiming they will benefit only the rich and not the rising number of low-income workers who are choosing HSAs.
State Rep. Mark Honadel (R-South Milwaukee) had this to say:
"Some people say HSAs do not help people of lesser income, and that's just false. If a young person starts in the workforce and starts an HSA, he can save just the same way as the next guy. It's not dependent on wage structure. It just comes down to the fundamental issue of do we want government to take care of us all the time, or do we want to take care of ourselves? A lot of people want to take care of themselves, especially if they're young and healthy."
"Unfortunately, I think our governor is one of the last in the country that continues to veto this legislation, so it's becoming very frustrating," Honadel continued. "As a team in Wisconsin, [the legislature] has been passing very good HSA legislation, but the governor keeps vetoing it. So we either have to get a new governor, or he has to wake up."
Darling said she would reintroduce the bill in the next legislative session.
"We passed [similar] legislation two years ago. We could have been up and running by now," Darling said. "People are going to hear about this in November."
We of course think that HSA contributions should be deductible on Wisconsin state income tax returns. Nevertheless, they are deductible for Federal Income taxes, and can save you up to $1,700 or more each year.
Visit us at http://www.health--savings--accounts.com for information on Health Savings Accounts. You can also see a list of other HSA State Income Tax standings.
Posted by Wiley Long at 12:03 PM | Comments (0)
May 26, 2006
Health Savings Accounts will encourage preventive healthcare
Many Americans are failing to get the preventive medical care that could help them live longer, healthier lives, according to a new study by the American Journal of Preventative Medicine.
Preventive measures that can be paid for from a Health Savings Account, like a daily dose of aspirin, colon cancer screening and smoking-cessation therapy, are all effective ways to save lives and healthcare dollars, but fewer than half of Americans who need these services are getting them, the study found.
The findings, published online by the American Journal of Preventive Medicine, are based on an analysis of more than 8,000 previously published studies. Researchers with the non-profit groups Partnership for Prevention and HealthPartners Research Foundation ranked 25 recommended preventive services according to their potential health benefits and medical-cost savings.
Besides aspirin therapy, colon cancer screening and smoking cessation, the most effective preventive services include childhood vaccinations, blood pressure screening, Chlamydia screening for young women, and immunizing adults against the flu and pneumonia, the researchers conclude.
Yet, with the exception of childhood vaccinations, the majority of Americans may be missing out on at least one of these services, according to the report.
"If these services were more consistently offered to the American people, fewer people would die and fewer people would suffer from diseases that are preventable," study co-author Ashley Coffield, an analyst with the Washington, D.C.-based Partnership for Prevention, said in a statement.
For example, low-dose aspirin therapy has been shown to be a cheap, effective way of lowering the risk of heart disease and stroke. If doctors discussed aspirin therapy with all at-risk patients, the study authors conclude, it could save 80,000 lives annually.
Similar benefits could be seen if doctors asked all patients about their smoking habits, then offered smokers brief counseling and recommendations for cessation therapies, according to the researchers.
Not only would this spare many people from lung cancer, heart disease and other ills, but it could also save $3 billion in medical costs each year, Coffield and her colleagues estimate.
According to the researchers, their rankings of preventive services do not negate the importance of lifestyle factors, such as diet and exercise. But, they say, the study does highlight those medical practices that create the greatest health benefits for the lowest cost.
Visit us at http://www.health--savings--accounts.com
Posted by Wiley Long at 10:22 AM | Comments (0)
May 25, 2006
Health Savings Account owners learn to cut health care costs
An individual or family with a High Deductible Health Plan (HDHP) is typically responsible for paying the first $2,000 to $5,000 of their health care needs out of pocket - if not more. That makes it important and meaningful to get the best price possible for their health care.
The ammunition to actually negotiate health care prices comes from several sources.
In the past, the prices doctors and hospitals charged insurance companies weren't known. But because insurance companies (including Medicare) negotiate to buy procedures and care for thousands of patients, they were much lower than the "list prices" doctors and hospitals would charge the rare patients who were paying cash.
Now, those prices are starting to emerge. Private insurers like Aetna have started programs in parts of the country (Cincinnati is an early example) where they'll publish online the exact prices they've negotiated with doctors in the area for hundreds of medical procedures and tests.
The company hopes to replicate this program in other areas of the country. Other insurers are talking about doing the same.
Finally, and most recently, Healthgrades.com, which is the largest provider of quality information on doctors and hospitals, is now publishing information on 55 different surgeries and procedures and what they cost on average, in total, across the country.
Their information comes from the real prices paid by 80 different insurers. A report on a particular procedure or surgery is available for $7.95.
Whether you have an HDHP today, or are just trying to make the most of the dollars you spend leading up to your own deductible, negotiating for health care is a skill you will need in your arsenal in the very near future.
From Jean Chatzky, the author of the best-selling book "Pay It Down!"
The proper procedure
- Price Shop. Before you go in for care, if at all possible - and in an emergency situation it may not be - understand what this should cost.
Get the difference between the list price (what doctors and hospitals bill for, on average) and the discounted or negotiated price that a health plan negotiated (which you and your insurer typically share). These prices can be hugely different.
- Negotiate. It's tough to ask a doctor - a person who commands your respect and deference - for a better deal. Understand, you're not the only one doing it. According to a Wall Street Journal Survey from the end of last year:
13% of American adults have negotiated with a pharmacist to see if they could pay less.
12% have negotiated with a doctor.
10% have negotiated with a dentist.
9% have negotiated with a hospital.
Those numbers may not look especially big, but the payoff can be. To wit: 70% of adults who talked with a hospital say they were successful in negotiating a lower price for their medical bills.
64% who negotiated with a dentist were successful.
61% who negotiated with a doctor were successful.
56% who negotiated with a pharmacist were successful.
- Ask About Cheaper Options. There are often less costly choices to what the doctor has prescribed.
Lew Randall, 64, from Freeland, Wash., recently suffered a shoulder injury. His doctor originally told him an MRI, at $1,200, would be in order to assess the damage.
When the doctor heard Randall would be paying the bill himself, he recommended a $300 barium X-ray instead?
"Is it just as good?" Randall asked.
"If it were my shoulder, that's what I'd have," the doctor replied.
"So why recommend the MRI?" Randall continued.
"It's newer technology," the doctor shrugged. "That's what patients want."
(Randall went with the X-ray and not only spent $900 less, but found the injection from the X-ray cured his shoulder as well.)
A second question is whether all tests and procedures are necessary or overkill.
Sometimes a doctor knows he's being overly cautious and will take a wait-and-see approach if he knows you're paying the bill.
Finally, have a back-pocket alternative or two. If you are only willing to use one doctor or one hospital, as in any negotiation you don't stand as great a chance of success as if you're really willing to take your health care business elsewhere.
- And last. If you're one of the 40 million people without health insurance, you should know that one of these high deductible plans may in fact make insurance affordable for you.
The Web is a great place to start shopping. Go to HSA for America and get started.
Posted by Wiley Long at 10:01 AM | Comments (0)
May 24, 2006
Analysis shows uninsured purchasing Health Savings Account plans
The Maine Heritage Policy Center (MHPC) has released a status report on Health Savings Accounts. It covers what they are, how they work, and why they are good for Americans. The report is written by Tarren Bragdon, director of health reform initiatives at MHPC. The report examines how Health Savings Accounts (HSAs) are performing since their implementation two years ago (January 2004), and how Health Savings Accounts are working to lower the cost of health insurance premiums and the ranks of the uninsured.
"HSA insurance plans have been successful in reaching the uninsured and keeping down insurance premium increases," says Bragdon. "These plans are revolutionizing health insurance by providing individuals and small businesses with low-cost health benefit while encouraging savings for future medical expenses. This report shows how over time an individual could accumulate thousands of dollars in their HSA while having a comprehensive health benefit."
A Health Savings Account is a savings account that is combined with a lower-premium, higher-deductible health insurance plan. The savings account allows for an individual or family to pay for out-of-pocket health care costs. Contributions are income tax deductible and withdrawals are tax-free, if used for health care - including medical, dental, vision, and many other expenses. You can see a list of HSA qualified medical expenses.
"This year, the Maine Legislature voted to make HSA contributions tax deductible for state income tax purposes," commented Mr. Bragdon. "I commend state policymakers for finally providing Mainers with the same health care benefit enjoyed by 44 other states."
The key findings in the report include:
- Premiums for HSA-eligible plans are typically 28-35 percent lower than traditional health insurance premiums.
- HSA plans provide individuals the same discounted prices for health care services given to insurance carriers and large companies.
- HSAs put real money in the pocket of employees.
- 30 percent of those buying HSA-plans were uninsured.
- HSA enrollment spans all demographics - young and old with low to high incomes.
- HSA premiums are increasing at the rate of inflation, as opposed to their traditional counterparts that are increasing two to three times that rate.
- HSAs promote fiscally conscious health care consumers.
- In Maine, lower income families with HSAs contribute the same or more per household member as higher income families.
- Effective January 1, 2006, Mainers can deduct HSA contributions on their Maine income taxes.
The report is available at www.mainepolicy.org. In early summer 2006, MHPC will be releasing a series of case studies on Maine companies and individuals who have HSA plans.
The Maine Heritage Policy Center is a 501 (c) 3 nonprofit, nonpartisan research and educational organization based in Portland, Maine. The Center formulates and promotes free market, conservative public policies in the areas of economic growth, fiscal matters, health care, and education - providing solutions that will benefit all the people of Maine. Contributions to MHPC are tax deductible to the extent allowed by law.
Learn more about HSAs at http://www.health--savings--accounts.com
Posted by Wiley Long at 10:15 AM | Comments (0)
May 22, 2006
Poll suggests congress should make Health Savings Accounts available to seniors
An overwhelming majority of Americans believe Congress should step in and fix federal law to allow seniors on Medicare to establish health savings accounts. Commissioned by the HSA Coalition, a new Zogby International survey shows fixing the law would help seniors pay for health care. Dan Perrin, president of the HSA Coalition said, "it is well past the time Congress fixed the failed Medicare HSA provision. It's been on the books for a decade, without a single Medicare HSA being offered to a single senior citizen on Medicare."
The poll showed that 88 percent of respondents favored congressional action on the matter, clearing the way for the accounts for seniors and setting straight a problem that has kept them from establishing the accounts, even though a federal law allowing the accounts for seniors has been in place for more than a decade.
Support for the action is widespread across political and demographic lines. Among Democrats, 89 percent favor the action, while 88 percent of Republicans support it. Both the young and old also favor congressional action - 86 percent of those ages 55 to 69 favor it, while 89 percent of those age 25-34 and 91 percent of those 35-54 also back it.
Favor for fixing the problem for senior Medicare HSAs also spanned geography, as nearly 90 percent of respondents in every region of the nation said they supported congressional action. The poll showed similar responses across all income brackets.
Asked whether seniors should be able to learn the dollar value of their Medicare benefit so they can use those funds to purchase an HSA qualified health plan, and deposit the remaining balance in their Medicare HSA, 86 percent of respondents in the poll agreed.
Ninety-one percent of those in the eastern U.S., 86 percent of those in the South, 84 percent of those in the Midwest and 81 percent of those in the West agreed that seniors should be told what the cash value of their Medicare benefit would be, so that they could consult their insurance agent to buy their Medicare health plan and to deposit the cash left over into a Medicare HSA.
The survey showed that a majority of Americans are familiar with health savings accounts, which are growing in popularity as a tool to help families deal with health care expenses. The HSA program allows people to save money in a tax-favored account and must be used for medical expenses. The survey showed that 13 percent of Americans now own a health savings account of their own.
The Zogby International survey was conducted April 19-25, and included 1,020 respondents nationwide. The poll carries a margin of error of plus or minus 3 percentage points.
Learn more about Health Savings Accounts at http://www.health--savings--accounts.com
Posted by Wiley Long at 09:22 AM | Comments (1)
May 19, 2006
CO House Passes Discount Drug Plan For Health Savings Account Holders
The Colorado House is backing a plan to sell discounted drugs to the state's estimated 750,000 uninsured residents and thousands of small business employees.
The proposed plan would be open to any resident without health insurance as well as people covered by health savings accounts, which usually don't have drug coverage. A lot of Health Savings Account holders work for small businesses that can't afford traditional health insurance plans.
Under the plan (Senate Bill 1), the state would enter into a buying pool with other states to buy drugs at a discount for people on Medicaid, the state insurance plan for the poor. Those same discounts would be available to any uninsured Coloradan regardless of income.
To join a pool, the state would have to come up with a list of the most effective and cheapest drugs to treat its Medicaid patients. That's one of the reasons Owens vetoed similar legislation last year.
Some Medicaid patients, including the disabled, feared their health would be at risk if the best drugs to treat their conditions weren't included on the preferred drug list. This year, the proposal would allow the state health care policy department, rather than a separate panel, to draw up that list. Sen. Bob Hagedorn, D-Aurora, said Owens could ask the department director to include any drug he wants to.
Owens' spokesman Dan Hopkins didn't immediately return a phone call seeking comment.
Rep. Alice Madden, D-Boulder, said drug lists were widely used by private health insurance plans to save money and it makes sense for Colorado to be just as frugal and take advantage of bulk buying.
"We believe the state should shop at Costco rather than going to Saks Fifth Avenue or Nieman Marcus," she said.
The proposal was passed one day after another drug bill was killed by lawmakers.
House Bill 1100 was backed by drug companies and organized labor and modeled after one used in Ohio. Supporters promised discounts on drugs up to 30 percent but pharmacists complained that they would be forced to bear much of the cost of those discounts, partly because drug companies don't issue rebates on generic drugs. About 70 percent of the drugs sold under the Ohio plan since last year have been generics.
Pharmacists, the AARP and the Consumer Public Interest Research Group helped kill that proposal and backed Senate Bill 1, which is similar to a Maine program. According to AARP, it saved people an average of 50 percent on generic drugs and about 24 percent on generics.
The bill also is supported by the National Federation of Independent Business because it would cover those in health savings accounts. However, Rep. Lauri Clapp, R-Littleton, worried it may encourage some employers to drop expensive health insurance coverage.
NFIB Colorado director Tony Gagliardi doubted employers who currently buy traditional health insurance plans would give them up because they provide much lower drug prices to patients than drug buying pools ever can.
He said state statistics showed that the number of people using health savings accounts grew from 1,075 in 2004 to about 26,000 in 2005. Over 70 percent of the new participants didn't have previous health insurance at all, he said.
Learn more about Health Savings Accounts and what they can do for you at http://www.health--savings--accounts.com
Posted by Wiley Long at 10:46 AM | Comments (0)
May 18, 2006
President Details Health Savings Account Plans
President Bush detailed his comprehensive strategy to make Health Care more affordable and available for all Americans through Health Savings Accounts (HSAs), improved price transparency, and other innovative reforms. The Administration says they are determined to reduce health care costs by pursuing practical, commonsense reforms that will improve quality and increase choice.
"America leads the world in health care because we believe in a system of private medicine that encourages innovation and change. The best way to reform our health care system is to preserve this system of private medicine, strengthen the relationship between doctors and patients, and make the benefits of private medicine more affordable and accessible."
The following is a portion of the White House Fact Sheet:
The President Has Five Key Policies To Make Health Care More Affordable And Available For All American Families
1. Expand Health Savings Accounts (HSAs). HSAs lead patients to demand more value for their money by enabling them to control their health care spending.
- HSAs Have Two Components: Low-Cost Catastrophic Insurance Coverage And Tax-Free Savings Accounts. Catastrophic coverage provides protection in the event of a devastating medical illness. HSAs allow Americans to contribute to a tax-free account to pay for routine medical needs and to build up savings by rolling over any contributions unspent in a given year. HSAs can help us move our health care system away from one where a third party pays for most of the costs to one where consumers make their own health care decisions.
- HSAs Are Making Health Care More Affordable And Accessible. From March 2005 to January 2006, the number of HSAs tripled from 1 million to more than 3 million. Forty percent of those who own HSAs have family incomes below $50,000. More than one-third of those who bought HSAs on their own had previously been uninsured.
- HSAs Are Helping American Hospitals. More insured Americans means fewer people arriving at our Nation's hospitals needing uncompensated care.
- The President Believes Congress Needs To Give Americans Who Buy HSA Policies On Their Own The Same Tax Breaks As Those Who Get Their Health Insurance From Their Employers. Under current law, the self-employed, the unemployed, and workers at companies that do not provide health insurance are at a great disadvantage. The President also believes Congress should fix the tax code to raise the limit on tax-free contributions to HSAs. In addition, the President has proposed a refundable tax credit to help low-income Americans purchase health coverage on the individual market. Under his proposal, low-income families can receive up to $3,000 in a refundable tax credit to purchase HSA-qualified insurance.
- Health Insurers Should Be Allowed To Sell Portable HSA Policies Nationwide. Today, the savings in health accounts are portable, allowing savings accounts to be taken from job to job. However, the health insurance within HSAs is often not portable because of outdated laws and practices that prevent insurers from offering portable policies.
- The President Calls On Congress To Move Bills That Improve Tax-Free Health Savings Accounts. These bills will end many of the biases in the tax code, provide a tax credit of up to $3,000 for low-income families, and make HSAs more attractive to millions of Americans.
2. Increase Transparency. To get the best quality care for the best price, patients need to know in advance what their medical options are, the quality and expertise of doctors and hospitals in their area, and what their medical procedure will cost. HHS Secretary Michael Leavitt is encouraging leaders in the health care industry to post their "walk-in" prices to all patients, and the President has directed HHS to make data on Medicare's price and quality publicly available on the Internet. The Administration is also asking insurance companies to increase health care transparency by providing their negotiated prices and quality information to their enrollees – and the Federal government will do the same.
- To Help Spur This Transparency Revolution, The Administration Will Require Transparency From Insurance Plans Participating In Federal Programs. Beginning this year, the Federal Employees Benefits program and the military's Tricare system are asking contractors to provide price and quality information. The President is also asking hospitals and insurers to make information on prices and quality available to all patients, increasing transparency without the need for legislation from Congress to require transparency by law.
3. Apply Modern Information Technology. Too many doctors' offices and hospitals have the most advanced technology of the 21st century but still use last century's filing systems for managing medical records. A nationwide information network will protect the privacy of a patient's medical information while making health information available in real-time. We are making good progress toward the President's goal that most Americans have an electronic health record by 2014.
4. Enact Association Health Plans (AHPs). Unlike big businesses, small companies cannot negotiate lower health-insurance rates because they cannot spread their risk over a large pool of employees. AHPs would allow small firms to band together across state lines and buy insurance at the same discounts available to big companies. The House has approved AHP legislation four times during the President's Administration, and it is now time for the Senate to pass legislation that makes health insurance more affordable for small businesses.
5. Enact Medical Liability Reform. The glut of frivolous lawsuits are driving good doctors out of practice and driving up costs by forcing many doctors to practice defensive medicine – ordering unnecessary tests and writing unnecessary prescriptions. The total cost of defensive medicine to our society is an estimated $60 billion to $100 billion per year, including $28 billion billed directly to taxpayers through increased costs of Medicare, Medicaid, VA, and other Federal health programs. Junk lawsuits are a national issue requiring a national response. The House has passed a good medical liability reform bill, and it is time for the Senate to act.
See the entire White House Fact Sheet on Making Health Care More Affordable and Accessible for All Americans
Posted by Wiley Long at 11:06 AM | Comments (0)
May 17, 2006
HSA for America Releases 'The Complete Consumer's Guide to Health Savings Accounts'
HSA for America, the nation's leading broker for individual and family health insurance plans that qualify to work with Health Savings Accounts (HSAs), has just released a comprehensive report on HSAs entitled "The Complete Consumer's Guide to HSAs."
Health Savings Accounts enable people with qualifying high-deductible health insurance plans to set aside money in a tax-favored account, which grows tax-deferred and can be used tax-free to pay for future medical expenses. "There seems to be a large lack of understanding about how HSAs work, even among bankers, insurance agents, CPAs and other financial advisors", says Wiley Long, President of HSA for America. "We put together this report to help people understand how they can use an HSA to lower their taxes and their health insurance premiums, and at the same time build a second retirement account."
“Because an HSA is the only investment tool that gives you a tax-deduction now, along with tax-free withdrawals later, it is actually the first retirement vehicle you should fund”, added Long. “Medical bills will be a large expense for the typical retiree. By establishing a fund now that can be used to pay for future medical expenses, one can make their retirement dollars go much further.”
Mr. Long points out many people don’t realize all the benefits an HSA plan offers. “You can take money out of your HSA tax-free to cover medical expenses that wouldn’t normally be covered by a health insurance plan.” Examples of expenses that can be paid for from an HSA include alternative medical treatments such as homeopathy, household medical expenses like aspirin or cough syrup, eye exams and dental treatment.
The report, available at no charge from HSA for America, includes strategies for maximizing tax deductions and fund growth, information on record-keeping requirements, and instructions on how to choose the right insurance plan.
Also included is information on choosing an HSA administrator. “When you purchase an HSA-qualified health insurance plan, most insurance companies also help you set up your HSA. But there are many banks and institutions offering health savings accounts with lower fees and more investment options than the HSA available through the health insurance company”, says Long.
Get your free report now: http://www.health--savings--accounts.com/free-guide.htm
Posted by Wiley Long at 10:34 AM | Comments (0)
May 16, 2006
Coalition on Health Savings Account Coordination
The Coalition on Health Savings Account (HSA) Coordination is supporting the introduction of the Tax-Free Health Savings Act by Rep. Eric Cantor (R-VA) according to the Coalition's chairman Duane Olson, who manages employee benefits plans at Deere & Company.
"This bill represents another step forward in the process to truly transform our health care system, and that transformation begins with the active participation and engagement of our employees," Olson said
"We applaud the bill and specifically want to congratulate Congressman Cantor for his inclusion of two important provisions he had previously championed in HR 4511. This bill will increase the current contribution limits to promote widespread adoption of HSAs and permit coordination of HSAs with other popular accounts, like flexible spending accounts (FSA) and health reimbursement arrangements (HRA)."
Olson continued: "The real challenge facing employers as they seek to adopt HSAs is the reality that a significant percentage of their employees are burdened by the high deductible, especially those with lower incomes or chronic care conditions. Permitting coordination of different plans -- like flexible spending accounts and health reimbursement arrangements -- will accelerate the growth in health savings accounts by ensuring that these accounts make sense for all working Americans and enable employees to plan, budget, and manage their own personal responsibility."
"As the legislative process moves forward, our hope is that the five year period allowing coordination will be expanded so that working Americans and their families can enjoy the many complementary benefits that each of these accounts offers into the future," Olson said. "At a time when American families' personal savings rates are low and health costs are growing, promoting educated health care decisions by informed consumers is not only smart policy, it's smart living."
Background on Coalition
The Coalition on HSA Coordination was created in 2005 to examine the issues underlying the expansion and strengthening of Health Savings Accounts. Recognizing the positive impact of HSAs on small businesses and the uninsured, the Coalition pairs the experience and leadership of many of America's medium-to-large employers and explores the potential for coordinating an employee's Health Savings Account with other personal accounts.
The goal of coordination is simple: to provide a full continuum of flexibility for high deductible health insurance plans with Flexible Spending Accounts (FSAs), Health Savings Accounts (HSAs), and Health Reimbursement Arrangements (HRAs). By allowing the employee to coordinate these accounts, he or she can better manage their total annual costs, saving both the employee and employer from double-digit increases in premiums.
Posted by Wiley Long at 08:15 AM | Comments (0)
May 15, 2006
Cash Doctors are taking advantage of Health Savings Account Self Pay Market
Health savings accounts and uninsured care is a growing market, and some doctors are taking advantage of this new self pay market.
Many patients are learning to become smart shoppers. With the increase in the health savings account (HSA) market, patients are becoming savvy consumers of health care services, often shopping for value. The key for these patients is to be able to compare costs and understand what healthcare services are affordable.
Doctors are taking notice and a growing number are changing the way they do business.
Also, the percentage of working-age Americans with moderate to middle incomes who lacked health insurance for at least part of the year rose to 41 percent in 2005. This is a dramatic increase from the 28 percent in 2001 for those without coverage. These findings were released this month in a study by the Commonwealth Fund, a New York-based private, health care policy foundation.
How do doctors perceive this new population of uninsured patients? A growing number of doctors are realizing that middle income earners represent a new and growing market for their practices. In fact some doctors are moving away from insurance based practice to cash based practice, thereby serving the needs of uninsured middle income patients. Dr. Jeff Oster, medical director of HowMuchDoc.com has witnessed the growth of this uninsured market first hand. “Uninsured patients are very tentative and hesitant to enter into a relationship with a doctor for fear of cost” Oster said. “But once they realize that they can afford healthcare, the sense of relief is quite obvious.”
In addition to uninsured patients, Health Savings Account owners are also driving this change to cash based practices. “Comparing the costs of medical services is a new concept for many patients” said Dr. Oster. “Patients become empowered when they realize that they can take charge of their healthcare.”
The internet provides an opportunity for doctors to market to this new and growing population of self pay patients. An internet based search tool has been introduced by HowMuchDoc.com that enables patients to search for doctors by zip code. Doctors can market their practices on HowMuchDoc.com for free. Doctors display their demographics, training and charges for a dozen of their most common office based services. HowMuchDoc.com providers include physicians, podiatrists, chiropractors and dentists. Since the administrative costs of an insurance company are eliminated, most doctors on HowMuchDoc.com reduce their normal fees significantly, some up to 30%.
HowMuchDoc.com charges no sign-up fees, membership fees or subscription fees. HowMuchDoc.com provides this service free of charge for consumers and doctors. HowMuchDoc.com is a not-for-profit, limited liability corporation based in Ohio.
Learn more about Health Savings Accounts and their benefits at http://www.health--savings--accounts.com
Posted by Wiley Long at 09:26 AM | Comments (0)
May 12, 2006
More people will start companies, thanks to Health Savings Accounts
One of the White House's key health care goals for 2006 is to make Health Savings Accounts more attractive. President Bush has asked Congress to raise the limit on how much money can be contributed to an HSA per year. He would also like to create a tax deduction for all out-of-pocket expenses paid via an HSA that is set up individually rather than through an employer. Furthermore, the Bush plan would let taxpayers write off insurance premiums for high-deductible health insurance plans that they obtain outside of a traditional employer-sponsored health plan. What will this do for aspiring entrepreneurs?
Health Savings Accounts are a great innovation, and not simply because they provide employers with a way of buying cheaper coverage for their workers at a time when health care costs continue to rise. They also provide an aspiring entrepreneur with a health insurance cushion so that he or she feels more comfortable leaving a job that provides coverage in order to start a company.
Think back to the time when you were first contemplating striking out on your own. You most likely had a job at a company that paid you a nice salary and offered a retirement plan and other benefits. Starting a business meant giving up the safety net your employer had provided. And since you probably couldn't afford to take a comparable salary at first, you also faced a variety of unappetizing choices like dipping into savings, or running up credit card debt, or borrowing money from your friends and family.
But although becoming an entrepreneur involves taking a huge financial risk, I'll bet that didn't faze you nearly as much as the decision to walk away from your employer's health insurance plan. Giving up coverage is a difficult step to take, especially if you have a family. This is why so many entrepreneurs treat their start-ups as moonlighting gigs for months and, in some cases, years after they launch.
So what does this have to do with health savings accounts? In health care industry jargon, HSAs are portable, which means that people can take an HSA plan with them when they leave a job. The balance also rolls over from one year to the next, so any money that goes unspent accumulates with interest. This is income that workers set aside on a pretax basis. And in some cases, it's not even their money. Employers who adopt HSAs to reduce the cost of their health insurance plan can use the savings to fund some or all of their employees' accounts.
We're not talking about huge sums, of course. HSAs came into existence only two years ago, and many people spend what they place in those accounts each year. Plus, there are limits on how much money you can deposit annually. Currently, individuals are allowed to save up to $2,700, while families can save up to $5,450 per year. Even if a would-be business owner has only a few thousand dollars saved, however, that money enables him or her to pay for basic medical expenses like doctor visits, pharmacy bills, and new eyeglasses.
Like any health care alternative, HSAs involve tradeoffs. A start-up entrepreneur must pair his or her HSA with a High-Deductible Health Plan (HDHP) that will cover major medical expenses. In some cases, it's possible to continue to use an individual insurance policy set up by a previous employer. But in states that have "community rating" laws, which are intended to prevent insurance companies from charging different rates to different individuals, obtaining high-deductible coverage may be difficult.
Assuming that an entrepreneur qualifies for this type of insurance, there is still risk involved. The government caps the amount of money an HSA holder can be asked to pay out of pocket--$5,250 for individuals and $10,500 for families--but that's still a lot. And if a person has $1,000 in an HSA, and a $5,000 deductible, a $4,500 medical expense could be extremely painful.
Still, even critics allow that having an HSA is better than no coverage, which is exactly the circumstance faced by many start-up entrepreneurs and the people they recruit to come work for their young companies. A lot has been written about HSAs from a consumer perspective, but one of their least-understood benefits is that they provide a little security to the person who wants to take the entrepreneurial leap.
Posted by Wiley Long at 10:25 AM | Comments (0)
May 11, 2006
Credit card payment processors rush into Health Savings Account market
As employers shift more health care costs toward workers, financial services firms are banking on Health Savings Account medical payments being their next big growth conduit.
The initial efforts of banks and credit card companies are focused on offering user-friendly cards tied to Health Savings Accounts (HSAs). Some experts say these accounts will be to today's health plans what 401(k)s were to traditional pension plans, and financial companies are trying to jump in early to a market with multibillion-dollar potential.
"We think that over the next five years, the payments-processing opportunity is the most attractive for financial institutions, just looking at HSAs by themselves," said Aamer Baig, a partner at DiamondCluster International, a Chicago-based management consulting firm.
Exante Financial Services, the Minneapolis-based banking unit of UnitedHealth Group, began a test this month in Texas of a program called OnePay, which allows consumers to pay just their portion of a medical bill with a MasterCard-branded card.
It's also linked to that consumer's insurance company, so the medical service provider gets fully reimbursed the insurance company's part of the bill immediately. Consumers don't have to pay for everything upfront and wait for reimbursement checks. Exante expects the OnePay system will cut billing and other administrative costs 40 percent for insurers and 90 percent for medical service providers as well as save consumers time.
Exante isn't alone in what's currently estimated to be a $2.3 billion industry.
Columbus-based Total System Services, one of the world's largest processors of debit and credit card payments, this month inked a deal with Exante to run health payment card transactions on the TSYS network.
And American Express launched its HealthPay Plus card last year in conjunction with Empire Blue Cross Blue Shield of New York.
"Our focus is around the administrative and the financial experience for the consumer," said John Prince, Exante's chief executive officer. "There are a lot of areas on the administrative and financial sides where you could have a bad experience."
The company, which has 20 million health-related card accounts in circulation separate from the OnePay pilot, is one of the nation's largest repositories for health savings accounts, with 25 percent of the market.
HSAs, established by consumers through a bank or credit union, are essentially savings accounts that earn interest tax-free. Like Flexible Spending Accounts (FSA), the money in an HSA goes toward approved medical expenses.
Set amount put aside
But there's a key difference: You can only spend what's in the account.
With an FSA, you've pre-pledged a set amount to put aside, and it usually comes directly from your paycheck. Your employer will fund the account because you're paying it back a bit at a time toward your pledged amount whenever you're paid. But HSAs limit spending to what's actually in the account.
Still, many of these health savings account cards come with a line of credit — limited to health-related expenses — that is automatically triggered if your expenses exceed your HSA balance. Like regular charge cards, the credit lines charge interest, and those rates are based on your credit history.
"Consumers want a way to bridge that funding gap," said David Bonalle, vice president and general manager of advance payments at American Express. "Because the card is integrated with the medical savings plan, we make sure the amount you get charged is the lower amount that the health plan negotiated with the health care provider."
HSAs do have their advantages. Unlike flexible spending accounts, in which the consumer forfeits any amount not used within that calendar year, HSAs roll over every year. And like FSAs, employers can contribute to HSAs in addition to employee deposits.
What's more, after they retire, consumers can withdraw money from their HSAs for any purpose and pay taxes as they would on a traditional individual retirement account.
But the Internal Revenue Service, which is responsible for some HSA guidelines, requires the consumer to enroll in a qualified high-deductible health plan (HDHP) with a deductible of at least $1,050 for individuals and $2,100 for families this year.
Still, consumers are adopting them at a fast clip.
Since 2004, a year after the law creating them was enacted, financial services firms have opened more than 1 million HSAs and are establishing new accounts at a clip of about 50,000 a month, according to DiamondCluster.
By 2010, the firm expects some 15 million to 25 million HSA accounts with more than $75 billion in assets.
"Those are phenomenal numbers just for the payments business," said Phil W. Tomlinson, CEO of TSYS. "It's a huge opportunity for us long term."
If the growth trends hold up, TSYS expects that as much as 10 percent of annual revenue could come from health-care-related transactions within the next five years.
"We've been trying to make a big splash in the health market for a long time now," said Bob Borneman, health care initiatives director at TSYS Prepaid, a Total System Services subsidiary. "Our deal with UnitedHealth Group gets us in the market for a variety of different health care providers. The banks are very interested in being in the health care market because they see this as a way to offer health-related products and retain those funds."
McKinsey & Co., another consulting concern, estimates the health-care-oriented financial services market will be a $10 billion-a-year business by 2010.
That explains why several of the biggest financial services firms — including Bank of America, JPMorgan Chase and Wells Fargo, along with Exante and AmEx — are positioning themselves to divvy this growing market.
DiamondCluster's Baig, who co-authored a study on the segment this year, anticipates that by 2013, most employers will switch from defined health benefits to defined health contributions, much like they migrated from traditional pension plans to 401(k)s.
HSAs will only increase in popularity, Baig said, because employers, especially manufacturers, will be enticed by the lower costs to them.
"With HDHPs in general, the premiums on them are much lower," he said. With health care costs rising at a fast clip, big companies are looking to keep expenses down. Health care costs at troubled General Motors, for example, are about $1,500 of the price of a new car, he said.
Potential for riches
Financial services firms want to get in on them because it's a potentially rich revenue stream.
Banks make money through fees from each HSA card transaction, similar to debit card purchases. They also benefit from charging account management fees to employers and monthly maintenance fees of $2 to $6 to employees.
Furthermore, they can use them to cross-sell other products to HSA customers, Baig said. For example, Transamerica Financial Advisors in Los Angeles said last month it would start offering securities brokerage services to customers of HSA Bank in Waterbury, Conn., who have extra funds in their accounts to invest.
"What we're seeing is these accounts in general are starting to grow quite rapidly," said Bonalle. "We certainly see that the health savings account industry is large and growing, and we would like to be a player in that."
Posted by Wiley Long at 09:49 AM | Comments (0)
May 10, 2006
Comparison of Health Savings Account plans vs. Non HSA plans Surprises Experts
While Health Savings Account plans are popular with respondents to a nationwide survey conducted by Information Strategies, Inc., traditional health plans are still satisfying the needs of a majority of individuals.
With more than 2,000 respondents from across the nation, the survey offers a glimpse at future trends in health insurance such as Health Savings Accounts (HSAs) while also providing some comfort to supporters and users of more traditional plans.
Overall, 81% said they were satisfied with their current insurance plan but 43% of non-HSA respondents were concerned about pricing, versus just 6% of HSA users.
The bottom line is that except for pricing, most non-HSA insurance plan users are satisfied with their current offerings.
“This survey shows the differences and similarities in user outlook of the nation’s healthcare insurance programs,” said JoAnn Laing, president of Information Strategies, Inc. (ISI). The media and marketing company conducted the nationwide poll throughout March.
“What’s more, when compared with HSA users, this group utilized their insurance plans with about the same profile except in terms of wellness and smoking cessation,” she added.
Yearly premium costs, however, differed by $2,650 on average between the two groups with non-HSA ($7,861) users paying on average 33% more than the HSA group ($5,211). The average deductible for HSA respondents was $1,899, while that of non-HSA respondents was $467.
One of the main differences between HSA insurance and non-HSA insurance is the need for a higher deductible in the former case. The survey clearly indicates that on average, the higher deductible is offset by the reduction in premiums.
The survey disclosed that there were little differences in the make-up between users of HSA programs and non-HSA programs.
- Average Age HSA: 39 Non-HSA: 40
- Average Income HSA: $42,200 Non-HSA: $43,912
- Gender of respondent (Male) HSA: 89% Non-HSA: 47%
- Education (post high school) HSA: 79% Non-HSA: 76%
The survey also showed that there was little statistical difference in the overall health of HSA and Non-HSA users. On average, more than 64% of both groups reported they and their spouses were in good to excellent health. However, while less than 8% reported chronic illnesses in either themselves or their spouses, a non-HSA respondent was three times as likely to have such a condition than a HSA respondent.
There were also little differences in the age of respondents by insurance plan or by geography. Every state in the union was represented in the survey along with more than 200 different five-numbered zip codes. On average, HSA respondents had 2.4 members covered while non-HSA respondents had 3.1 covered family members.
Not surprisingly, more HSA respondents came from the so-called “Red States” while non-HSA respondents were more concentrated in the east and mid-west regions.
On average, HSA respondents had their accounts for about 14 months while the average for non-HSA was 2.5 years.
In terms of general coverage, HSA users were more favorable (62%) than non-HSA users (51%). For drug programs, the reverse was true, with 60% of non-HSA users favorable versus 52% for HSA users.
While two out of every three HSA users said they would recommend their plan to a friend, less than half (47%) of non-HSA users would tell someone to purchase their current plan.
More than half of the HSA respondents said they purchased their plan themselves compared to more than 60% of non-HSA who said they received their plan through work.
This survey shows some interesting trends in our current healthcare system. To learn more about Health Savings Accounts, visit http://www.health--savings--accounts.com/
Posted by Wiley Long at 09:42 AM | Comments (0)
May 09, 2006
Consumers Want Health Savings Accounts
Getting policymakers to understand the value of health savings accounts (HSAs) may best be done by introducing them to constituents who own HSAs or high-deductible health plans (HDHPs).
That was the purpose of a March 29 briefing on Capitol Hill sponsored by America's Health Insurance Plans (AHIP) and the National Association of Health Underwriters (NAHU). All seats were taken, and people lined the back of the room as congressional staff and media heard Health Savings Account owners and insurance brokers discuss why HSAs work for them. Listen to what they had to say:
Better Method
"One of my small business customers moved to a health savings plan so they could hang onto coverage," said Misty Baker, an insurance agent from Austin, Texas. "Soon after, they were blessed with three beautiful babies. Like all infants, those babies needed lots of preventive care. One of the strong points of their HSA plan - in addition to lower premiums - is that it covers all the well-baby care, like routine immunizations, even before their deductible is met. This gave mom and dad peace of mind, not to mention some extra money left over for diapers."
When John Ghysels' father was 48, he had a massive heart attack and required triple-bypass surgery. Ghysels, of northern California, is now in his 40s and trying to avoid his father's experience partly by taking cholesterol-lowering drugs.
"Some people say you shouldn't be in an HSA if you think you might have health expenses," Ghysels said. "I disagree. I am saving about $80 a month on premiums, which helps free up dollars for other medical expenses. Second, having an HSA has made me conscious of prices, and I have found some ways to get real bargains. For example, I've saved about 75 percent off the price of prescription drugs by doing simple things like buying from discount outlets, such as Drugstore.com and Costco. I found they charge about 67 percent less for my generic medications than the corner retail drug stores.
"On my brand name medication, I learned that the manufacturer charged the same for a 40-mg dose as they did for a 10-mg dose," Ghysels said. "So, in accordance with the manufacturer's instructions and my physician's permission, I simply split my pills. This allows my 90-day supply to last me for an entire year. It was easy, perfectly safe, and cost me lots less than even my old HMO co-pay. Just imagine if we approached all of health care this carefully. I think it would be a good thing."
Rising Premiums
Chris Krupinski, a widow with three children living in Fairfax, Virginia, has run her own business for the past decade. But she said she found it difficult to stay with one health insurance company during that time, because the premiums would rise every 18 months.
Before purchasing her HDHP in 2004, Krupinski's PPO policy cost her $10,800 a year in premiums and carried a $2,000 deductible. When HSAs were created, she learned she could get one for $4,200 a year with a $3,500 deductible. Now, she said, she comes out ahead in several ways.
"Every month, I put about $350 into my HSA and pay $350 for the premium," Krupinski explained. "That HSA is my money, and yet I am still paying less per month than I was under the old policy. As far as I'm concerned, I look at my deductible as a 'no-deductible' plan. The beauty of this is that if I have anything left over at the end of the year, that money is mine. It gives me options, and it is much better financially.
"Before, when I wrote those premium checks out each month, that money was just gone," Krupinski noted. "Also, my business is somewhat cyclical, so in the summer, when business and my income slow down, I have the flexibility to put less into my HSA."
Unique Advantages
Ronnie Miles, a 36-year-old Democrat from Baltimore, had to make a choice between health insurance and his mortgage when he formed his own consulting business three years ago. He chose the mortgage, going without coverage for two years. Now he has an HSA.
He's found that in addition to paying his medical expenses, an HSA has several advantages over more traditional plans.
"I have already used my HSA money to pay for dental visits, eye exams, and glasses," Miles said. "These services were not covered under my more expensive PPO, but by using the HSA dollars, I could use pre-tax dollars and get negotiated rates."
A Gallup poll released the last week of March revealed Americans believe their most pressing concern is the "availability and affordability of health care," with 68 percent saying it worried them "a great deal". Not the war. Not terrorism, not the economy. Congress has the chance to press for more market-based solutions to ensure more choices like Health Savings Accounts are available. If their political radar is working, they will listen.
Posted by Wiley Long at 07:24 AM | Comments (1)
May 08, 2006
Large employers offer employee Health Savings Account incentives
A majority of top executives at large U.S.-based multinational companies have offered employee programs or incentives for a healthy lifestyle and have provided information on health care quality, says a survey by PricewaterhouseCoopers’ Management Barometer and its Health Research Institute. Health Savings Accounts play a major role in overall health care quality.
More than three-fourths (76 percent) of executives surveyed see a link between their employees’ health status and their productivity, and 65 percent believe the design of their health care benefits plan has a connection to employees’ overall health.
“Because these executives see a connection between their company health benefit plan, employee health and workforce productivity, they have a vested interest in maintaining and improving employee health,” said Michael Thompson, Global Human Resource Solutions partner with PricewaterhouseCoopers, in a press release.
Sixty-four percent offer their employees programs and incentives for improving their health and well being, although only 19 percent described these programs as strong or above average.
Nearly one in five executives said their workforce’s health has improved over the past two years. The majority (59 percent) said their workforce’s health status stayed about the same over the past two years.
Most large companies give workers choices within their health care plans, with some offering newer benefits such as wellness programs and health care quality data, according to the PricewaterhouseCoopers survey. It found that 82 percent of survey respondents offer employees choices in their health care plan.
Among those choices:
• 98 percent provide cost and coverage options.
• 64 percent offer health savings accounts (HSAs).
• 54 percent offer a selection of insurance companies.
• 22 percent expect to offer more choices over the next 12 months.
A 2005 Hewitt Associates survey found that 30 percent of employers offer incentives to encourage employee participation in wellness programs, up from 21 percent in 2004, HR Magazine reported in January. The Society for Human Resource Management’s (SHRM) 2005 Benefits Survey found that 62 percent of respondents to its survey offered a wellness program, resources and information, up from 56 percent in 2004.
What one small employer did
At the Bank of Geneva in Geneva, Ind., HR director Jeanne E. Akins is passionate on the subject of offering supplemental insurance as a way of lowering medical claims and improving employee health.
Its third party administrator created a supplemental insurance that raises the deductible and creates an incentive for employees to address their health issues by using wellness reimbursement credits.
“It is a great solution for addressing the lifestyle-related claims that are impacting our health care costs,” she said, likening it to earning a lower premium for being a good driver.
To get employee “buy-in” before introducing the supplemental insurance, the bank showed employees how the cost of health insurance would exceed its payroll in 10 years, “and that was only if our claim experience remained ‘good,’ ” Akins said.
Under the plan, “employees must choose to address health issues, most of which are lifestyle-related, if they want to pay less out-of-the-pocket expenses,” the SHRM member told HR News in an e-mail.
Participants undergo medical tests that provide them with vital health information that establishes the credits that they may take to their doctors for consultation purposes, she said.
Each $500 wellness credit an employee earns reduces his or her personal out-of-pocket health care cost, although companies could use different wellness credits, such as $100, Akins pointed out.
Employees pay more of the out-of-pocket medical expenses they incur when they do not meet the wellness credits, she said. If they don’t have any medical expenses, they pay nothing.
The employer pays the entire cost for insurance premiums for the 41 employees on the plan and does not require employees to contribute toward the cost of the medical premiums.
“After one year, the savings to the bank that resulted from the supplemental insurance allowed us to contribute $500 to health savings accounts for our eligible employees,” she said.
“Based on what our former trend line indicated and what we are paying now,” the bank, which employs 52 workers, “has saved $400,000 these past two years. Our claims are down, and so are our premiums. Our prescription care is up, because blood pressure and cholesterol, et cetera, is being treated. But that is what we want.”
Dependent or family plan employees contributed toward premium expenses until the employer dropped that last year when it implemented health savings accounts (HSAs), she said. The bank encouraged employees to redirect the amount already deducted for premium costs into their HSAs to help them meet out-of-pocket medical expenses or save for future medical expenses.
“By doing this, they would be benefiting from automatically putting the money into their HSAs without seeing a change in their take-home pay,” something most employees have done, Akins said.
Indirectly, the HSAs expanded the type of benefits the employer offered. The employer did not offer vision or dental coverage, but employees can use HSA funds for those needs, she added.
Cost remains the top priority when it comes to designing the corporate employee health care plan, according to the PricewaterhouseCoopers survey, but one in four executives also gave quality of care a high priority, and 86 percent said it is a top priority in designing their company’s health care plan. That includes 53 percent who said it is their highest priority.
“If the medical costs are going to be controlled, we have to look at the root of the cost: the claims. Most of the claims are lifestyle related,” Akins said.
“The solution is there. We just have to do the hard stuff like eat right, exercise and stop smoking. What’s going to make us do that? Maybe getting test results back and spending more of our own money will make us consider what we are doing to ourselves.”
Find more Health Savings Account information at http://www.health--savings--accounts.com
Posted by Wiley Long at 08:05 AM | Comments (0)
May 05, 2006
One Company's success switching to Health Savings Accounts
USHEALTH Group is a small insurance company, with fewer than 200 employees, headquartered in Fort Worth, Texas. They recently switched their company's health insurance coverage to a health saving account for all employees. Here is how it went.
In March 2005, the company received a renewal notice from their group insurance carrier, UnitedHealthcare. USHEALTH had a traditional group health plan, with a $500 deductible and a $15 co-pay.
Employees were pleased with their health insurance plan, which cost the firm $5,600 per employee, but they expected to get some bad news in United's renewal notice. The loss ratio for the past year was 103 percent, and the broker had warned them to expect a sizable rate increase.
Loss ratios measure the relationship between the claims the insurer pays over the course of a year and the premiums paid by a policy group. Most insurers target loss ratios of 85 percent, leaving 15 percent of the premiums for profit and expenses. As expected, the renewal notice from United included a hefty 19 percent increase, resulting in a new per-employee cost of $6,600.
In anticipation of that news, the company had requested an alternative quote from United for a high-deductible health savings account (HSA) qualified plan. Neither the company's broker nor United recommended the company do a complete conversion, feeling it was too radical a move. They counseled there would be serious morale consequences: Most employees would feel threatened by a high-deductible plan, they said, and would feel sticker shock when their $15 co-pays disappeared. Moreover, they reported, no other local employers were contemplating such a dramatic change in their health insurance plan for employees.
Against their advice, USHEALTH Group decided to install a $2,000 individual, $4,000 family deductible HSA-qualified plan. The premium savings were compelling: Instead of a 19 percent increase, the high-deductible premium was 28 percent less than what the company had been paying. That lowered its per-employee cost from $6,660 to just under $4,000. These savings, combined with a small increase in the employee cost-sharing of the premium, allowed the company to contribute $1,750 for individuals and $3,500 for families into the HSA account, and to match additional employee contributions up to the full deductible.
Telling Employees
The company was prepared for a sizable employee backlash--but if anything, they underestimated it. Along with its broker and UnitedHealthcare specialists, however, the company prepared a comprehensive education and communication campaign that included several evening sessions to which spouses were invited.
The extensive preparations were rewarded. Armed with a better understanding of how the plan would likely impact them financially, employees grudgingly accepted their fate. One big concern they expressed was the potential financial consequences of a sizable medical expense before sufficient funds were accumulated in the employees' HSAs. The company agreed to provide an interest-free loan up to the full HSA contribution if that occurred, with repayment coming from future employer contributions into the employees' accounts.
Several employees have used that financial bridge. And as an additional incentive, the company guarantees each employee's account will earn 6.15 percent interest, making extra contributions as needed to make up the difference between 6.15 percent and the lower interest rates offered by the accounts' administrator, First HSA.
"The key to making such a dramatic change has been employee education," explained Jan Fogg, USHEALTH Group's assistant vice president for human resources. "It's been a challenge to educate employees and cause a culture change in our company from the 'take care of me' thinking on our previous traditional plans to a consumer-driven health plan that requires personal responsibility. Employees are learning firsthand what the real cost of health care is, and that gets them involved, sometimes in creative ways, in being part of the solution to help curb the rising cost of health care."
Saving Money
The behavioral change occurred almost instantaneously. Now employees were spending their own money for health care services. Within a few weeks, the stories of what happened when employees became "shoppers" and not just consumers of health care services began to emerge.
"Participating in an HSA has forced me and my family to really take a look at our medical needs, and we find that although we don't avoid necessary treatment, we are less frivolous and more sensible about our decision to go to the doctor," employee Chuck Hoffman said. "We encountered some initial confusion with the doctor's office about billing our repriced fee rather than a nominal co-pay, but those issues have been resolved."
Sharing Information
Several employees have been diligent about "comparison shopping" for health care services such as X-rays and colonoscopy fees. They have shared that information with other employees, who also have been able to save.
The final piece of good news arrived in late February with UnitedHealthcare's 2006 renewal notice. The company's broker was all smiles as he said that, based on United's projection of a 67 percent loss ratio under the new plan, United was offering a mid-single digit renewal increase.
As USHEALTH Group's management had hoped, the new HSA plan has been a huge success for all concerned. Imagine the company's surprise when the insurance broker said no other employers in the area were considering such a bold change in their employee health insurance plans.
This is a great success story of how employers and employees can work together to fight the rising cost of healthcare. Find out more about Health Savings Accounts at http://www.health--savings--accounts.com
Posted by Wiley Long at 10:24 AM | Comments (2)
May 04, 2006
Tennessee looks to Health Savings Accounts
Health savings accounts could be one of many incentives designed to convince small businesses and individuals to support Gov. Phil Bredesen’s proposal to provide health insurance to low-income employees of small businesses.
Incentives will initially include allowing participants to continue an HSA plan when they leave a job, low deductibles and rewards for healthy living.
There is language in the bill that allows the program to apply health savings accounts (HSAs) to the high-risk pool, but Bredesen would eventually like to allow for the small businesses to be eligible for them as well. The governor said, however, that because of the $150-per-month average premium, HSA plans are probably not the most useful way for individuals to manage their spending at the start.
“It’s a little bit of a skinny plan to make it work in the classical way right now, but I’ve tried to put all the hooks in place so as this grows, there’s a natural way of incorporating that concept,” Bredesen said.
The incentives are part of the same movement toward consumer-driven health care, said Paul Keckley, a Vanderbilt University health economist. He said 4.3 million people had a health savings account by the end of last year, due in large part to a major push from large insurers like Humana and United Health Care. Keckley lauded Bredesen’s proposal as a “great start,” but noted that the effort is in its early stages.
“I think everyone acknowledges that this is going to be transformative and a long process to really shift from an employer-based health insurance system to a consumer-based health insurance system in which health insurance is purchased the same way in which you might purchase automobile insurance,” he said.
But HSA plans have high deductibles, ranging from $2,000 to $5,000 per year and Bredesen doesn’t want that kind of deductible for Cover Tennessee. Eventually, HSAs could be a tool for keeping people in the program, Bredesen said, by making them an added benefit.
“You have the ability to allow people to build up equity in the plan,” Bredesen said.
In February, Keckley conducted a study to determine whether consumers are able to navigate the health care system and Keckley found that, overwhelmingly, they aren’t.
“We have pretty well anesthetized consumers to the cost and quality of health care, and just throwing this HSA at people without having tools in place so we can navigate more effectively, I think, is a policy mistake,” Keckley said.
Bredesen has budgeted $100 million of TennCare reserves to cover the first three years of the program.
Posted by Wiley Long at 10:22 AM | Comments (0)
May 03, 2006
Custodial Health Savings Account Funding Nearly Doubled In 1st Quarter 2006
Not only are the number of Health Savings Accounts going up but the amounts deposited with custodial institutions are also soaring, according to preliminary quarterly reports from more than 100 banks.
In conducting its quarterly survey of HSA custodial banks, Information Strategies, Inc. is finding that average dollar deposits have gone beyond the $2,000 mark.
HSA banks report the number of accounts are moving upward in a trend that will result in more 3.6 million by the end of the year. At the same time, banks report seeing significant indications that depositors are funding their accounts to the maximum allowed by regulators.
In several cases, banks are reporting that average deposits nearly doubled from year-end totals.
The bank survey is in the process of being completed and will appear later in May.
This report is in line with results from ISI’s latest user poll which indicated that a majority of health savings account owners planned to keep funds in their HSA accounts for either emergencies or retirement.
Posted by Wiley Long at 08:29 AM | Comments (0)
May 02, 2006
Wal-Mart's Health Clinics will benefit Health Savings Account owners
With its recent announcement that it will open medical clinics in its super-centers, Wal-Mart is truly set to become the one-stop place to shop, says Rik Kirkland, Fortune senior-editor-at-large.
RediClinics -- which are staffed by nurse practitioners licensed to prescribe drugs -- offer a flat $45 fee for "Get Well" visits that include all the tests necessary to diagnose and prescribe for ailments like colds, flu, strep throat and pink eye. This will be a great low cost option for Health Savings Account owners.
says Kirkland:
- If you're uninsured, like half of the clinic's customers, it's a big saving over the $95 that a doctor's visit would cost and a huge savings over the $400 an emergency room might charge.
- "Stay Well" screenings for basic preventive medicine -- like a blood test to determine a cholesterol profile with glucose -- only cost $29 instead of the retail price of $65.
- Even though Wal-Mart is only collecting rent money, it views the clinics as an important addition to its stores since they will boost the retail chain's appeal and help fulfill its self-proclaimed mission to be a champion for working families.
- This mix of transparent prices, electronic efficiency and convenient hours looks, for now at least, like a winning formula.
However, there is a limit to the dent the clinics can put in the nation's swelling health-care tab, says Kirkland:
- For example, these clinics are not set up to treat people with serious chronic illnesses.
- Just like every other company, Wal-Mart is getting slammed by the rising cost of health care.
- Critics are also trying to force Wal-Mart to adopt more generous benefit standards.
Either way, this is great news for Health Savings Account owners. Now that a big company like Wal-Mart has entered this arena, these type of clinics should start to show up in more places.
Posted by Wiley Long at 08:39 AM | Comments (0)
May 01, 2006
Health Savings Accounts coming into the public consciousness
Half of Americans said their households are aware of health savings accounts, according to a new survey, "The Consumer Perspective on Health Savings Accounts," which was conducted by Synergistics Research Corp.
Among the 50% of respondents who said they were aware of HSAs, 60% ranked a bank or thrift first among providers of HSAs, followed by a credit union (37%), an insurance company (33%), a mutual fund company (27%) and a brokerage firm (9%). In addition, 80% of those respondents said that they would be likely to consider their main financial institution as a Health Savings Account provider.
The survey, the first that Synergistics has conducted, comes more than a year after President Bush advocated the expansion of HSAs in his 2005 State of the Union address.
"Consumers and employees need to stimulate employers to ask questions," said William McCracken, chief executive of Atlanta-based Synergistics.
"Consumers will not ask more questions until health savings accounts are offered."
Mr. McCracken added that one reason HSAs haven't sold well is that many consumers aren't seeing the products.
"The financial services industry can start educating consumers," he said.
"When the industry is ready to educate the consumer, it will be a two- to five-year process before HSAs really explode."
Synergistics conducted the online nationwide survey of 1,000 adults in October.
Obviously this is a small sample size and 6 months old, but it shows Health Savings Accounts are starting to take hold. Learn more about HSAs at http://www.health--savings--accounts.com
Posted by Wiley Long at 09:45 AM | Comments (0)