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October 28, 2009
Health Savings Accounts Are Benefiting Employees and Employers
Multiple surveys conducted by ACS Solutions have shown that employees and employers who are using a Health Savings Account and a HSA-qualified health insurance plan are saying they are satisfied with their coverage, spend less on healthcare and are more engaged in managing health benefits.
Tax-favored Health Savings Accounts are designed to help individuals pay for current qualified health care expenses and save for future medical and retiree health care expenses.
“With the vigorous debate over health care reform, and more specifically health insurance reform, the survey results indicate that employers and account holders more effectively control costs and are satisfied with their coverage by utilizing Health Savings Accounts,” said Tom Hricik, national director for Dallas, Texas-based ACS Solution, an administrator of HSA plans. “The survey results also indicate that Health Savings Accounts are being used by account holders as an important vehicle to save for future medical expenses.”
Employers found benefits to Health Savings Accounts, as well. Exactly 86% of those offering the option for more than three years indicated that plan costs were the same or less than the previous year. Almost all employers surveyed (96%) said Health Savings Accounts allow the company to continue offering group-sponsored health insurance.
The surveys were completed in the spring by Buck Consultants, an independent arm of ACS.
The surveys found that 84% of account holders said their HSA-qualified health insurance plans are affordable, and 72% said they pay the same or less than with a traditional type of health plan.
After moving to a Health Savings Account, more than half of account holders said they more closely monitor their health care costs, a finding that supports one of the key claims for how Health Savings Accounts ultimately save money.
Exactly 48% said they read their medical bills more closely, 46% have a better understanding of where their money goes, and about 40% more closely evaluate costs before electing medical services, according to the surveys.
A majority of HSA holders (81%) said the ability to personally control health care costs is an important factor that caused them to select an HSA.
Posted by Wiley Long at 10:28 AM | Comments (0)
October 25, 2009
Health Savings Accounts Continue Expansion
As the healthcare debate in country continues on, there are many banks that are finding their Health Savings Accounts are exploding.
Health Savings Accounts, which are designed to allow saving for medical and retiree health expenses, are savings accounts set up through banks. Proponents say they allow more flexibility in how workers use their health care funds, while critics say the accounts favor healthier and younger people.
At Dubuque Bank & Trust, senior vice president Doug Stillings says Health Savings Accounts are particularly attractive to small businesses.
They are finding Health Savings Accounts are beneficial for smaller businesses, where increasing health care costs are particularly burdensome. He contends that Health Savings Accounts are more open-ended for employees as well.
"Health Savings Accounts give the employee much more flexibility in what they do with their health care money," Stillings said.
Users can access their Health Savings Account with debit cards and then save receipts to show they are for health care related expenses. There's no "use it or lose it" provision, so contributions carry over from year to year.
Dubuque Bank & Trust has offered Health Savings Accounts for three to four years, and Stillings said they have been growing in popularity among business owners.
At Great River Oral and Maxillofacial Surgery, about half of the employees now have Health Savings Accounts along with HSA insurance plans that are required to open a Health Savings Account.
"Health Savings Accounts allow a lot of flexibility for a healthy group or healthy individual," said Robin Zenz, office manager.
Zenz said the office has about 35 employees and the Health Savings Accounts have been implemented for about three years. An increasing number of employees have been signing up for the HSA Plans.
Stillings said he hasn't had any negative feedback on the program, but he admitted that Health Savings Accounts are not meant for everyone.
An article by the staff at Mayo Clinic on the health care provider's Web site said negative aspects of Health Savings Accounts are that older and sicker people pay more, they don't allow for the difficulty in budgeting for unpredictable illnesses and that the pressure to save money in Health Savings Accounts might keep people from seeking preventative treatment.
Stillings said he didn't want to predict whether proposed health care reform could change the amount of interest in Health Savings Accounts.
"There are so many unknowns in the health care world right now," he said. "If we continue with the type of structure we currently have, Health Savings Accounts will continue to gain popularity."
Posted by Wiley Long at 10:40 AM | Comments (0)
October 22, 2009
Health Savings Accounts Are Better Than Flexible Spending Accounts
Not long ago, Flexible Spending Account were all the rage. They allowed you to set aside pre-tax dollars from your payroll check and place it into an account which you could use to pay for medical expenses. Unfortunately, these accounts have many drawbacks and they are no longer as appealing as they once were.
Today, Health Savings Accounts have replaced Flexible Spending Accounts as the preferred pre-tax dollar savings vehicle for healthcare spending. There are many more advantages to Health Savings Accounts which are more appealing to individuals and families.
The main benefit of the flexible spending account is that you can put up to $4,000 dollars per year into the account. That’s un-taxable money which lowers your tax liability come April 15. Technically, there is no federal limit on the amount you can place into the account, but it is usually capped at $4,000.
Lawmakers in Washington are fighting over what to do with these accounts. The ability to be able to place pre-tax money into them makes them one of the most popular depositories for money that is used for medical expenses. Any ‘messing’ with this benefit will smell of a tax increase on the middle class.
On the other hand, there is one reason that you should get out of your flexible spending account if you have one: you use your money by the end of the calendar year or lose it.
Enter the Health Savings Account. This account is also pre-tax contributable and you can also contribute to it on a post-tax basis too. You do not give up your money in a calendar year, either. You keep it and it keeps accumulating in your Health Savings Account with interest until you use it.
Under the flexible spending accounts rules and guidelines, you are asked to provide receipts and proof of purchase for every little charge made on the account. It is watched like a hawk. Health Savings Accounts still have the restriction of only being used for medical expenses, but there are no hawks looking over your shoulder. Should you become the target of an IRS audit, however, you will need to provide receipts for all of your purchases for the year in question.
It is time for the flexible spending account to die slowly. And it would on its own as long as those who are still using them can get a better deal elsewhere – which is possible with a Health Savings Account.
The advent of Health Savings Accounts has been a bright spot in the health care arena for several years now, even in spite of the annual limits that one must adhere to when placing money into the account. Those who do have a better chance of being able to pay for unexpected medical events that occur in their lives. And that is peace of mind that is hard to come by right now.
Posted by Wiley Long at 09:13 AM | Comments (0)
October 19, 2009
Health Savings Accounts Continue to Grow in 2009
According to a Canopy Financial's Health Savings Account Market Report for the first quarter of 2009, the average Health Savings Account balance continues to grow from quarter to quarter.
Canopy found that the average individual Health Savings Account holder for the first quarter of 2009 was 42 years old and contributed $116 monthly, up slightly from an average monthly contribution of $111 for the fourth quarter of 2008. The average family Health Savings Account holder for the first quarter of this year was 45 years old and contributed an average of $239 monthly, up from an average monthly contribution of $206 for the previous quarter.
For the same time period, the average monthly employer contribution increased from $69 to $113 for individual Health Savings Account holders. The average monthly employer contribution rose more significantly, to $266 for first-quarter 2009 from $133 in the previous quarter. The average ages remained the same for the groups from quarter to quarter.
“Consumers enrolled in HSA plans demographically are very similar to consumers of traditional health care,” notes Canopy CEO Vik Kashyap. He also points out “the fact that consumers are clearly using these accounts for saving towards long-term care needs and even retirement.”
First-quarter 2009 average individual HSA balances totaled $960, up from $928 in the fourth quarter of 2008 and from $697 for first-quarter 2008, according to Canopy. Average HSA balances for families also rose, increasing to $1,720 in the first quarter of 2009 from $1,600 in the last quarter of 2008 and from $1,419 in first-quarter 2008.
This trend of increasing contributions, says Kashyap, is noteworthy. “The most significant thing we have noticed is that even in a recession economy, both employers and consumers continue to make contributions to and invest in Health Savings Accounts, which supports the contention that HSA products have become a key/integral component of employer-sponsored health care, and that contributions in many ways mimic those made to 401(k)s in which people invest a little bit each month into these accounts in an effort to accumulate long-term wealth/funds for long-term medical needs,” he tells ICDC.
According to Canopy, the average monthly HSA spend for individuals in first-quarter 2009 was $81, down slightly from $83.54 in the previous quarter. Likewise, the average monthly HSA spend for families was $103 most recently, down from $108.19. Spending on hospital services continued to make up a large amount of the spend for both individual and family Health Savings Accounts over both quarters. Other categories of reported spend include dental services, vision and lab/diagnostic tests.
“The most important take-away for employers is the dollar values held in Health Savings Accounts, and the fact that their employees are using these accounts not only as savings vehicles for long-term medical expenses, but ultimately towards retirement,” maintains Kashyap. “Additionally, as their employees increasingly use a Health Savings Account to manage their health care expenditures, they are becoming much more informed/empowered consumers of health care services, which will play a key role long term in reducing overall health care costs of an organization and the costs associated with managing employer-sponsored health care.”
The report is available at: www.canopyfi.com/hsametrics.htm
Posted by Wiley Long at 09:06 AM | Comments (0)
October 16, 2009
Health Savings Account Administrator Gold Investment Option
One Health Savings Account administrator we know of, Entrust, is offering clients a chance to turn their Health Savings Account investments into gold. Their company has announced the launch of their new Golden Health Savings Account (HSA), which will allows individuals to invest their Health Savings Account funds in gold.
Most HSA plans offered by banks are limited to investments in bank-issued assets like CDs, with minimal returns. Investors have therefore expressed an interest in gold and precious metal investing and Entrust New Direction has responded with its new Golden Health Savings Account. Specially designed for ease of access, the New Direction Golden HSA opens the door to gold and other precious metals investments.
"Most Americans who own an HSA face a dilemma about investing their funds in an account that will grow and low-returns investment options offered by the banks are no longer enough. In a down economy, clients want to direct their funds into an investment option they can make the most of, and investing in metals can help them get the returns they are interested in", says Catherine Wynne, President of Entrust New Direction IRA Inc.
Longer term investments in an Health Savings Accounts were originally popular only for those who delayed healthcare-related withdrawals so they could maximize tax-free growth of the account. However, more HSA owners are discovering that their HSA is still full of cash after paying healthcare expenses and have expressed an interest in plans allowing gold investments. Clients believe investing in gold and other precious metals is a smart option as precious metals are relatively liquid compared to other hard assets and are available in small increments. Most importantly however, precious metals offer a potential hedge against inflation which is an important concern for most consumers.
The Golden HSA offers clients the ability to establish an automatic purchase plan with precious metals dealers of their choice. For investors interested in hands-off investment, the Automatic Golden HSA plan allows monthly, quarterly or annual automatic purchases of one type of coin or metal product, for a reduced transaction fee.
Golden Health Savings Accounts are not limited to gold and precious metals. Different fees apply for non-precious metals assets. Entrust New Direction does not provide investment advice nor sell any investments, including precious metals. The plan owner makes all investment decisions for the Golden HSA. All earnings are tax-free and can be used for any qualified medical expenses like doctor visits, laser eye surgery, medicine and many more health related expenses. Non-qualifying distributions are subject to tax and potential penalties. Gold and other metals must be stored at a depository.
"Unlike any other health plans, HSA deposits are tax-deductible and all the earnings are tax-free when used for qualified medical expenses. Some clients use the HSA money to immediately pay for medical expenses, but many account holders allow the funds to grow so they can pay for any future medical expenses which occur, including during retirement," concludes Wynne.
Posted by Wiley Long at 07:27 PM | Comments (0)
October 13, 2009
Health Savings Accounts Are Helping To Lower Healthcare Costs
Two business executives have suggested what we have been saying all along, that Health Savings Accounts along with High Deductible Health Plans would help reduce the effects of rising health care costs.
Tom Kennedy from J.F. Brennan Co. marine construction and Tom Brock from Altra Federal Credit Union said their firms have seen positive results with Health Savings Accounts. The two spoke at a forum sponsored by the Coulee Area Regional Employers, or CARE, Health Action Cooperative.
About 20 percent of companies nationally had switched to Health Savings Accounts by 2005, up from only 5 percent in 2003, according to the Kaiser Family Foundation.
Brock said Altra made the switch in 2007. Under Altra's HSA plan, the company contributes $292 a month to each participating employee's Health Savings Account.
Unlike the current flexible spending plans, Brock said, there is no "use it or lose it" characteristic with a Health Savings Account, in which all the employee-contributed money must be spent by year's end.
Instead, employees can amass up to $5,950 a year.
Altra has a $6,000 family plan deductible. Once the deductible is reached, those in the plan then pay 20 percent of care costs up to a total of $10,000, after which the plan pays the full cost of care.
While the high deductible can be a shock for those not used to such plans, it's "not enough to create financial hardship for the family," Brock said.
And the Health Savings Account gives employees more flexibility, he said.
Healthy employees who do not have any costs for the year "are rewarded with a growing Health Savings Account," Brock said.
Altra has 240 employees locally, and 134 use the Altra health benefits. Of those, 74 percent have more than $1,000 in their accounts, 44 percent have more than $2,000, and 11 percent have more than $5,000, Brock said.
Claims for the first six months of 2009 are 40 percent less than the first six months of 2008, he said, adding that Altra's 2008 costs were virtually the same as in 2005, despite 10 more employees in the plan.
Kennedy noted similar experience at Brennan.
Critics of HSA plans point to the high costs, along with sometimes more paperwork.
High deductible health insurance plans might encourage consumers to skip basic and preventive care if companies don't offer incentives for those services, said Larry McNeely, federal health care advocate for the U.S. Public Interest Research Group, in a telephone interview from Washington, D.C.
"It's great that companies are doing wellness and having incentives to get preventive health care," he said. "But that doesn't mean HSA plans don't create an obstacle for going to the doctor when you need to go to the doctor."
Posted by Wiley Long at 10:35 AM | Comments (0)
October 10, 2009
Health Savings Accounts Create Opportunities For Banks
Following healthcare reform closely, insurers and banks are fighting to keep tax-advantaged Health Savings Accounts as part of any reform.
Money in Health Savings Accounts can be used to pay for current health-care expenses, such as deductibles and co-pays, as well as to save on a tax-free basis for future medical expenses, such as Medicare premiums. To qualify for a Health Savings Account, investors need to be enrolled in an high deductible health insurance plan that meets certain criteria. This year those include a deductible of at least $2,300 for a family and $1,150 for individuals.
If Congress passes a healthcare bill this year, all health plans would have to meet certain criteria to qualify as adequate coverage. Most people's current coverage would be grandfathered in, but if they switched plans, those plans would need to meet the new standards.
Not all HSA-qualified health insurance plans, in particular those sold to individuals and small businesses, would make the cut.
"It's a concern. We want the accounts to be viable going forward," says Kevin McKechnie, staff director of the American Bankers Association's HSA Council, which represents banks, insurance companies and their technology providers. More than 2,000 banks, credit unions and brokerage firms offer Health Savings Accounts.
About a third of people who have Health Savings Accounts were previously uninsured and HSA-qualified health insurance plans have grown in popularity among small businesses, the group most likely to drop coverage in recent years due to its cost, he adds. Premiums for these plans are lower than for traditional options.
Congressional committees have set the bar at varying heights for the minimum standards that coverage must meet. For instance, the House bill says that health plans must have an actuarial value of at least 70% - meaning the insurance covers 70% of health-care expenses. The Senate Health, Education, Labor & Pensions Committee sets the bar at 76%. A proposal by Senate Finance Committee Chairman Max Baucus released Wednesday implies a minimum of 65%.
Benefits consultants and industry experts say that HSA plans offered by large employers are likely to meet the criteria, because larger employers tend to offer more generous benefits.
But many HSA plans offered by insurers to individuals and small businesses are unlikely to make the grade. Roy Ramthun, president of HSA Consulting Services and a former senior health-policy adviser to President George W. Bush, estimates the actuarial value of these products ranges from 50% to 70%.
"The higher the bar is raised, the less likely these products will continue to be offered in the future," he says.
Banks and insurers want employees' contributions to be factored into the value. The maximum annual contributions to Health Savings Accounts this year are $3,000 for individuals and $5,950 for families.
Launched around six years ago, Health Savings Accounts were the cornerstone of the Bush administration's policy for making health care more affordable for American families. Many high-deductible plans cover some preventive care or prescription drugs before the deductible is met.
Health Savings Accounts are unpopular with Democrats. High-deductible health plans have lower premiums than more traditional plans, but enrollees must pay more out-of-pocket expenses before their insurance starts picking up the tab. (This year the maximum deductible for an HSA-qualified plan is $11,600 for a family). Such arrangements tend to favor the young and healthy, those who receive generous contributions to their Health Savings Accounts, and individuals who can afford to cover out-of-pocket medical expenses while fully funding their Health Savings Accounts.
Democrats resisted the introduction of Health Savings Accounts, which were created by the 2003 Medicare Prescription Drug Improvement and Modernization Act, describing them as an "unnecessary $16 billion subsidy" for the wealthy. Savings not needed to pay out-of-pocket medical expenses can accumulate in HSA for years, attracting the attention of firms seeking to manage these accounts.
Posted by Wiley Long at 11:16 AM | Comments (0)
October 07, 2009
Health Savings Account Balances Increasing
According to data collected by Canopy Financial Inc, a provider of health care banking technology solutions, balances in Health Savings Accounts increased slightly in the first quarter compared to fourth quarter levels in 2008.
The average balance in a family Health Savings Account grew by 7% to $1,720 during the first quarter, while the average balance in an individual Health Savings Account rose 3% to $960.
And compared to the year earlier period, Health Savings Account balances also grew. The average family Health Savings Account balance was $1,419, and the average individual Health Savings Account balance was $697 during first quarter of 2008.
Contributions to Health Savings Accounts have also climbed for both employers and employees.
During the fourth quarter, the average monthly employer contribution was $69 and $133, respectively, for individuals and families. In the first quarter, that increased to $113 for individual Health Savings Accounts and $266 for family Health Savings Accounts.
Similarly, employees are also placing more money into their Health Savings Accounts.
Average contributions for an individual HSA were $111 for individuals and $206 for families in the fourth quarter of 2008. That rose slightly to $116 for individuals and $239 for families during the first quarter.
Steady contributions from employers and employees kept Health Savings Account balances growing amid the recession in the first quarter, noted Vik Kashyap, chief executive of Canopy Financial. “A high percentage of the employers that offer these accounts are contributing into the HSA,” he noted. “They fix the contribution on a monthly basis, so that it’s made irrespective of how the economy is doing.” Interestingly, while employees likely felt the squeeze on their dollars during the first quarter, they were fine with chipping into their Health Savings Accounts, he added.
“You’d expect people to not be contributing, but there’s a tax advantage here,” Mr. Kashyap noted
Health Savings Account holders also increased the amount of money that they transferred to investments.
In the first quarter, Health Savings Account holders transferred an average of $1,372 to investments from individual Health Savings Accounts and $2,633 from family accounts, compared with $1,167 for individual accounts and $1,978 from family Health Savings Accounts in the fourth quarter.
Amounts of money transferred into Health Savings Accounts from investments also rose, with an average of $722 transferred in from investments for individual accounts, up from $540 in the fourth quarter.
Meanwhile, on the family side, the amount transferred from investments dropped, falling to $1,157, from $1,556 in the fourth quarter.
Posted by Wiley Long at 09:17 AM | Comments (0)
October 05, 2009
Can a Health Savings Account Help Your Business?
One option that can help small businesses struggling with healthcare is a Health Savings Account. Small businesses are constantly looking for ways maintain overhead while still providing quality employee benefits. Money placed in Health Savings Accounts are not subject to federal income tax when deposited. Health Savings Accounts are designed to allow taxpayers to set aside funds to cover the costs associated with medical care. Individuals can benefit from using a Health Savings Accounts as a way to cover their out-of-pocket medical expenses.
Benefits of Health Savings Accounts
Here are some of the ways that Health Savings Accounts save money for individuals and small business owners who participate:
* The tax break that covers the funds deposited in Health Savings Accounts is passed on to the individual account holder. The more money deposited in the account, the less federal income taxes the account holder will have to pay.
* Health Savings Accounts are coupled with an HSA insurance (also known as high-deductible health insurance) plan that is the responsibility of the individual. This means employers do not have to assume the costs associated with group health insurance plans.
* Health Savings Account funds can be rolled over into the next year. There are no restrictions or penalties for not using all of the funds in a calendar year.
* Health Savings Accounts accrue interest over time and roll over from year to year.
Health Savings Accounts are excellent alternatives for small business owners wishing to help employees stay healthy and manage the costs of healthcare. They feature less risk for the employee and more benefits for the individual. Implementing Health Savings Accounts in a small business is evidence of the employers concern for the welfare of employees, yet it is an affordable and manageable option at the same time.
Health Savings Accounts for Companies Large and Small
While Health Savings Accounts are great for individuals and small businesses, larger businesses are also turning to them as a means of covering employees that are not benefited by health insurance plans. Industry leaders like Walmart and UPS have developed Health Savings Account programs to extend a helping hand to some of their employees.
Overall, Health Savings Accounts are a unique alternative to expensive health insurance programs. They provide small businesses with the level of affordability and flexibility that is desperately needed in these tough economic times.
Posted by Wiley Long at 03:58 PM | Comments (0)
October 01, 2009
Healthcare Reform Needs Health Savings Accounts
Health care reform is currently the #1 topic in America today. Many solutions have been offered to solve our healthcare problems. The President thinks a single-payer system would be best, but details have been sketchy and the outcome is in doubt.
A single-payer system would be risky because the government would hold all the money and remain vulnerable to political manipulation and bureaucratic inefficiency. We've seen this in Medicare and Medicaid.
The best system would be a well regulated "Everybody Hold Your Own Money and Pay Your Own Way System," which could be accomplished with Health Savings Accounts.
Health Savings Accounts would empower patients to deal directly with their caregivers without third-party interference or regulation and lead them to become sensitive to the potential benefit and the cost of their care.
Health Savings Accounts could be funded with pre-tax money from regular automatic savings, like payroll deductions, and everyone should have one from birth. Children’s Health Savings Accounts should be funded by their parents. In only a couple of years, normally healthy people would save enough to stay ahead of their health care expenses. They would save the same money they now pay in insurance premiums, so once in place, the new system would cost less because no money would go to insurance company administration and profit, and unnecessary procedures and tests would decrease because people would keep the money they didn’t spend.
When any Health Savings Account becomes large enough to cover anticipated needs, the extra money could be rolled over into a retirement account, or child’s Health Savings Account. At death, a person’s Health Savings Account could be rolled over to heir’s Health Savings Account, after an inheritance tax which would be used to fund Health Savings Accounts for the poor and unhealthy. Everyone would keep the money they didn’t spend, so they would not spend it unnecessarily.
Government’s role would become only regulatory. A commission might be needed to determine a fair market value for services and patented drugs, but it is likely that market forces would control these and make the mix of available services more appropriate to people’s needs.
To insure that Health Savings Account money was spent on effective care, and not wasted or stolen by fraud, standards of medical practice should be established with a Wikipedia-style online system to allow each licensed practitioner and researcher to propose, amend and vote on standards of practice in their field. A true consensus statement would then be available on every relevant standard of practice, which would be more up to date and represent truly effective practice, better than the opinions of a panel of “experts.”
The quality of evidence on any issue varies from one study to the next, and leaves room for differences in opinion about what is good treatment. Health Savings Accounts should be allowed to pay for all procedures which received an overwhelming vote of approval, and not for those with overwhelming disapproval. The more money in an account, the lower a procedure’s vote would need to be to have it included. The list of approved procedures would change, and its quality would improve as fast as new evidence and experience accumulated.
Regulations should also end patents for new drugs which do the same thing as established drugs, as well as new preparations of established drugs. Advertising of prescription drugs should end because it leads to unrealistic expectations and misdiagnosis. And these regulations should require saved money to be invested conservatively.
Posted by Wiley Long at 03:56 PM | Comments (0)