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May 28, 2008
Census Shows 4.5 million enrolled in Health Savings Accounts
A new census released by America's Health Insurance Plans (AHIP) discovered that 4.5 million Americans - a 43 percent increase from last year - are covered by lower-premium, high-deductible health insurance plans offered in conjunction with Health Savings Accounts.
The census found that 27 percent of those purchasing Health Savings Account plans in the individual market were previously uninsured and almost half of those enrolled in such plans were older than age 40.
In addition, the census reveals that HSA plans provide value-added services. Most companies offer HSA plans that cover preventive care before the deductible is met, provide disease management programs for chronic conditions, and include a wide array of Web-based tools to help consumers make more informed decisions.
This is the first AHIP census to compile information about Health Savings Accounts in conjunction with HSA plans. Eighty-eight percent of accounts in place in 2006 had average annual balances of $2,500 or less, while 4 percent had average annual balances more than $5,000. As of January 2007, 65 percent of accounts had been in place for less than one year.
Learn more about Health Savings Accounts at: http://www.health--savings--accounts.com
Posted by Wiley Long at 09:28 AM | Comments (0)
May 24, 2008
Banks Offering More Health Savings Accounts
Customers have been asking financial institutions for Health Savings Accounts (HSAs), and according to a survey conducted by Wolters Kluwer Financial Services (WKFS), banks and credit unions are beginning to respond to those requests.
Experts say the increased demand comes from consumers who want more control over their health care. And those customers are using Health Savings Accounts to do just that.
"You're calling the shots," said Greg D'Angelo, a policy analyst with The Heritage Foundation's Center for Health Policy Studies. "You're deciding what services you're obtaining and what the terms are. It's more transparent. You're actually seeing where the money's going. You're more involved. It's more market-based in that sense."
Of the 1,200 financial institutions that responded to the WKFS survey, 62 percent offer Health Savings Accounts. One-third of the rest plan to begin offering them before this summer.
Benefit Consumer, Banker
The financial institutions surveyed told WKFS they are offering Health Savings Accounts because of increased consumer demand and because Health Savings Accounts generate new accounts, boost cross-selling opportunities, and increase revenue.
"Banks and credit unions know Health Savings Accounts present them with a significant business opportunity and additional way to better serve their customers," said Dave Roy, vice president and general manager for banking at WKFS, in a news release.
"But it's also evident that this market is still relatively untapped," Roy noted, "and the greatest potential lies ahead, especially as health care costs continue to climb and consumers look for more effective ways to save and finance those costs."
Need for Consumer Awareness
But Health Savings Accounts have not yet established themselves as a permanent fixture in the health payment realm, D'Angelo said.
"While Health Savings Accounts are growing in popularity with financial institutions, customers are still in the early stages of adoption," the WKFS news release noted, "which may explain why customer demand is cited as both the number one reason institutions began or have not yet begun offering Health Savings Accounts."
D'Angelo explained the novelty of Health Savings Accounts frightens some potential consumers away. Some people fear experimentation with new ways to pay for their health care, so they approach Health Savings Accounts with caution. Others haven't yet grown used to asking questions about how much health care costs.
The survey reported 69 percent of financial institutions have 100 or fewer HSA accounts. Only 84 responding institutions have more than 500.
Helping Drive Change
Health Savings Accounts may relieve part of the crunch of today's health care market, but they're not the ultimate solution, D'Angelo contends.
"Health Savings Accounts are a consumer-driven product, an important component for the consumer-driven system, but they are a product, not a model," D'Angelo said. "We need more of a fundamental transformation in the system."
Nevertheless, D'Angelo believes Health Savings Accounts might help drive that more fundamental change--which the WKFS survey suggests may be coming soon, as both customers and their financial institutions are beginning to warm up to Health Savings Accounts.
Posted by Wiley Long at 09:38 AM | Comments (0)
May 20, 2008
Health Savings Accounts Attacked by Backroom Earmark
Congressman Pete Stark (D-CA) is next in line to be the Chairman of the House Ways and Means Committee. He's probably also public enemy number one to Health Savings Accounts. He has tucking an earmark into a tax bill which would cripple and undermine Health Savings Accounts.
First, some background: HSA funds can generally only be used for qualified medical expenses. Taking money out for non-medical reasons generally results in taxes owed on the withdrawal, plus a 10% penalty. Taxpayers assert that the withdrawal was for medical expenses (or not) on their tax return, under penalty of perjury.
Like any other deduction, liars and cheats are caught using the IRS's audit process as it has been done for many years.
But that's not good enough for Stark. He wants to have HSA holders get independent verification that the withdrawals were qualified. Not coincidentally, there is only one company (Evolution Benefits) that has the technology to do this, and it's the one lobbying for this provision.
This provision is a win for both Evolution Benefits (who gets to corner the market on third-party substantiation, for which they have a patent), and Pete Stark (since he knows this will scare off banks, businesses, and consumers from offering Health Savings Accounts). And since it will drive up costs on Health Savings Accounts, this is a mortal threat to taxpayers who use Health Savings Accounts.
Posted by Wiley Long at 10:13 AM | Comments (0)
May 16, 2008
Use of Health Savings Accounts Continue to Grow
In a market where health insurance costs continue to rise for employers, more companies are turning to high-deductible health plans – and the accompanying Health Savings Accounts – to help defray costs.
An estimated 7 million people are covered by 2.2 million Health Savings Accounts as of the beginning of 2008, according to a survey by industry publishing company Atlantic Information Services Inc. Those HSA accounts hold $3.2 billion, up 60 percent from $2 billion at the beginning of 2007.
Several banks that offer Health Savings Accounts say the accounts’ popularity is growing – especially among small businesses that want to reduce their costs while still offering insurance benefits to employees.
The advantages
Kansas City-based UMB Bank, which has four branches in Springfield, passed the $100 million mark for Health Savings Accounts systemwide in January, marking a 52 percent increase in account balances compared to the previous 12 months.
Dennis Triplett, president of UMB Financial Corp. Healthcare Services, said health insurance premium costs have been outpacing inflation – average premium percentage increases have hit double digits each of the last five years, while inflation has averaged only 2.8 percent – making companies eager to reduce insurance expenses.
“One thing (employers) can look at is increasing co-pays and deductibles, and having employees pay greater shares of the premium,” said Triplett, who is based in Kansas City but was scheduled to visit Springfield April 11. “They’ve done some of that, but now they’re looking at other things that can be done, and one is consumer-directed health care with a higher deductible.”
Higher deductibles mean higher risk for employees, but Missouri State University finance professor Stanley Adamson said that increased risk means lower premiums, making the trade-off attractive to employers and some employees.
He added that Health Savings Accounts allow individuals to have total control over their money – how it’s invested and what it’s used for – and can accumulate funds over time.
“If those monies aren’t used entirely in a year, you can continue to accumulate the money and draw interest on it, saving it for when and if you need it,” Adamson said of HSAs. “With a traditional flexible spending account, when you put money aside, if you don’t use it (before year’s end), you lose it.”
On the downside
Despite such advantages, Adamson said employee perception is among the drawbacks to Health Savings Accounts.
“If you’re dealing with an employee that is relatively low-income, these increases in front-end deductibles are going to be viewed as a reduction in benefits,” he said. “It’s not going to be well-received by any employee probably, but certainly not those with lower incomes.”
He noted that reductions in taxable income aren’t a big incentive for low-income employees, as 40 percent of all Americans don’t make enough money to pay income taxes at all.
Adamson also said that some companies offer the high-deductible health plans and accompanying Health Savings Accounts in addition to a traditional insurance plan – but this, too, has its risks.
“The higher-income people, or the younger and healthier people, would opt for the high-deductible plan, leaving the older and higher-risk people in the other plan, which would cause premiums to increase,” he said.
UMB’s Triplett said the biggest challenge associated with Health Savings Accounts is educating consumers to think differently about health care.
“The biggest challenge is how to communicate the concept, because it is a change in the basic way people look at health care,” he said. “How do you get the employee to understand that they are now engaged in the process, that these are their dollars and they have control over how they can be spent?”
Growing demand
Challenges aside, demand for Health Savings Accounts is only expected to grow. The U.S. Treasury Department estimates that, assuming the laws regulating Health Savings Accounts are unchanged, up to 30 million people will be covered by Health Savings Accounts by 2010.
“I can think of no disadvantages to the accounts,” said Doug Marrs, chief operating officer for Great Southern Bank. “If you qualify for it and can possibly scrape together the funds for an HSA – and I don’t care where it is or who it’s with – it’s a huge advantage.”
Marrs said Great Southern began offering Health Savings Accounts shortly after they were created in 2004. He declined to say how many accounts the bank had, though he said it was “several hundred.”
Even banks that don’t offer the accounts see the benefits. While Commerce Bank doesn’t offer Health Savings Accounts, Vice President Karen Favor said they are being considered for the institution’s portfolio.
The bank is particularly interested in Health Savings Accounts targeted at small businesses rather than individuals.
“I think there’s a lot of educational issues that go along with the (individual) offering,” Favor said. “Customers drive by a branch, see that we offer Health Savings Accounts and might think they can have one, when in truth they’re going to have a certain type of health care plan and there’s a lot of tax implications and ramifications. That’s I think why the employer channel is more attractive to Commerce, because we’ll know we’re targeting the right audience.”
Posted by Wiley Long at 08:27 AM | Comments (2)
May 11, 2008
HSA for America Opposes Health Savings Account Substantiation
HSA for America strongly opposes any proposal that would require substantiation of Health Savings Account withdrawal transactions or any radical change to the current administration of Health Savings Accounts.
Health Savings Accounts are a dynamic, consumer-friendly and increasingly popular health insurance product enjoyed by millions of Americans. Current law already requires individuals with an HSA to keep and supply receipts to the Internal Revenue Service when requested. It is the individual's responsibility to keep good tax records--through self reporting--just as they do with charitable contributions and other tax deductions.
Imposing substantiation rules on Health Savings Accounts will add enormous costs to Health Savings Accounts, which will inevitably be passed on to the consumer. One of the benefits of consumer-directed health care products like Health Savings Accounts is the removal of unnecessary overhead from the health care process, which has proven to lower administrative costs. Right now, 90% of HSA withdrawals are done electronically through a debit card, ATM or check. The same proportion (90%) of withdrawals from an FSA is done by paper/manually. Adding this new requirement would bring HSAs back into the world of paper/manual transactions thus increasing costs and making it more burdensome for the consumer.
HSA substantiation also fails to recognize that HSAs and Flexible Spending Accounts (FSAs) are inherently different products and should not be treated the same. The HSA is an individually owned account and FSAs are an employer group-owned account. Substantiation of FSAs currently benefits employers because they get to keep any unused funds in their employees' FSA accounts at the end of the year. However, unused funds in an HSA accrue for future health care expenses for the account holder.
Health Savings Accounts place significant responsibility with the account holder, which is an attraction for the beneficiary and the employer. Ironically, at a time when Congress is seeking to enhance the use of Health Information Technology to help reduce costs and improve quality, efforts to radically change the oversight and administration of Health Savings Accounts in such a way would be a giant leap backwards.
Requiring substantiation on HSA transactions is a bad idea that would lead to a significant decrease in electronic transactions, longer wait times for reimbursement for individuals and higher administrative costs. We look forward to working with Congress and the administration on making the cost of health care more affordable for all Americans (not less) because insuring more Americans is in everyone's best interest.
Posted by Wiley Long at 06:54 PM | Comments (0)
May 08, 2008
A Health Savings Account Can Meet Your Family's Health Needs
Making sure that your family is able to stay healthy partly depends on having a good health insurance program for them. One of the more recent new additions to the health insurance industry is called the Health Savings Account (HSA). This new program enables you to have reduced insurance rates because of a higher deductible, and a tax deferred savings program with it. Here are some of the features of this program:
Reduced Rates
By getting a health insurance program with a high deductible, you are able to greatly reduce your monthly premiums. This is an especially good way to go, if you are younger and currently have pretty good health. The deductible amounts are pre-determined by the government, and you are required to have deductible amounts between $1,050 and $5,250 for singles, and it needs to be between $2,100 and $10,500 for families.
Savings Are Tax Exempt
One of the great benefits of this type of plan is that, like an IRA, you enjoy tax-free income, and interest on the amounts you have in the program. You can put into the plan money that comes off the top of your taxes. There are limits, though, and for singles it is up to $2,700, and for families it is $5,450. A little extra benefit is that you are able to take off of your taxes any money that is deposited into the account all the way up to April 15th. So, if you are coming up to tax time, and find you need to reduce your taxes some more, you can put it into your HSA, and find the tax break you need.
Better Coverage
Health Savings Accounts have an extra real nice feature - they cover more. Some things that you may not have been covered for under another type of policy, you may find that you are covered for with an HSA. This could actually allow you to get a better coverage for less. Things like dental coverage, therapy, even non-prescription medicines and some alternative treatments may also be covered, and even some mental illness treatments, too.
You Keep Control
Under an HSA, you are the one in control of the money. It is yours to use. You can take money out of the account when you want, but only the money that is used only for medical purposes is tax-exempt. Generally, you will be given a card, like a credit card, that gives you access to the account. Whenever you use money from the account, the insurance company automatically gets a receipt, and it is subtracted from your account, and your deductible - and it remains tax exempt.
Like any other insurance policy, once you have paid the deductible amounts, the rest is up to the insurer to pay. By having the high deductible you reduce the premiums considerably. The savings account can also provide a good hedge for your medical insurance program for the future, too, because any money not used toward the deductible remains your money – to use next year, if you need it. On the other hand, the money in your HSA might also be used to provide some money for retirement - assuming you maintain your good health.
Posted by Wiley Long at 10:08 AM | Comments (0)
May 05, 2008
Employer Interest in Health Savings Accounts Is Growing in Colorado
Fifteen percent of Colorado employers offered Health Savings Accounts (HSAs) in 2007, and 23 percent considered offering one, according to a survey conducted by the Mountain States Employers Council (MSEC).
"It's a good thing!" said Linda Gorman, director of health care policy at the Colorado-based Independence Institute. "The more choice you give people, the better off they are. You have more choice with the HSA because you can spend it on anything the IRS deems a legitimate health expense."
Patty Goodwin, overseer of the MSEC study published in February, said she knew of no similar national survey. However, she said she thought Colorado was probably on par with the rest of the nation in HSA offerings.
Lack of Familiarity
One of the biggest challenges HSA advocates face is simply convincing people to explore a less-familiar way of managing health coverage, said Goodwin.
Though many employers offer both Health Savings Accounts and traditional health insurance, she explained employers and employees have a general lack of understanding about them. This causes employees to cling to their traditional plan even if they could benefit from a health savings account.
"HSA adoption rates have usually been dependent on how well the employer educates people to the plan," said Gorman, though even well-informed employees struggle with deciding whether an HSA works best for them.
The tradeoff, Gorman explained, is that the lower cost of an HSA comes with a higher deductible. Consequently, "people are taking baby steps into Health Savings Accounts."
Greater Choice
Because the money paying for medical care comes out of a bank account instead of an insurance company's checkbook, people must decide for themselves whether an illness merits a trip to the doctor or whether they'd be better off waiting it out, Goodwin noted. As an alternative, some HSA owners explore preventive medicine and focus on wellness instead of treating sickness as it happens.
Proponents of Health Savings Accounts maintain HSAs offer a good option overall for consumers who want more control of their medical coverage.
"Here's another way that maybe we can help curb health care costs while giving consumers more choice," said Goodwin.
Posted by Wiley Long at 11:23 AM | Comments (0)
May 01, 2008
Aetna To Offer Health Savings Account Plans To Conn. Businesses
Aetna will begin offering individual health insurance policies to about 40,000 businesses and through 79 Chambers of Commerce in Connecticut, under an agreement with the Chamber Insurance Trust.
The arrangement is aimed at sole proprietors of businesses and workers who don't have insurance through an employer, and could help reduce the number of uninsured residents in the state, said Stephen Glick, administrator of the trust.
The trust is an alliance of chambers of commerce across Connecticut and Western Massachusetts, which was created in 1992 to combine their buying power for insurance.
The trust already offers employer-based health plans from ConnectiCare, and Medicare Advantage plans from Health Net.
Aetna will offer a variety of individual plans through the trust, including preferred provider plans (PPOs), high-deductible plans that are compatible with Health Savings Accounts, and an optional dental PPO. Aetna will also provide plans that combine preventive care and high-cost coverage, such as for hospital stays and outpatient surgery.
All of the individual plans are subject to medical screening to determine eligibility.
Posted by Wiley Long at 10:50 AM | Comments (0)