Among the alphabet soup of consumer-driven health plans, health savings accounts (HSAs) are growing at lightning speed. Since they were created only three years ago, more than three million Americans are now covered by HSAs, according to America's Health Insurance Plans (AHIP), the Washington, D.C.-based trade group to companies that provide health insurance coverage. That figure will continue to grow, predicts Jerry Ripperger, director of Consumer Health at The Principal Financial Group, because "what we're seeing now is adoption [of HSAs] from the individual and small group market into the large group market."
For instance, The Principal, a global financial company in the retirement/health care space, plans to offer an HSA to its employees come January 1. "We're going to have a pretty sizable number of participants in the plan," Ripperger suggests. Small businesses were the first group to embrace HSAs because unless they're set up as a C Corp., he notes, they're not allowed to participate in other consumer-driven health plans like Flexible Spending Accounts (FSAs) and Health Reimbursement Arrangements (HRAs).
A number of bills are also wending their way through Congress that are designed to increase HSAs' "attractiveness," according to Ripperger (for a table describing those bills, please see this story in the November issue at www.investmentadvisor.com).
The most comprehensive bill, he notes, is the Tax Free Health Savings Act of 2006 (H.R. 5262), which is sponsored by Rep. Eric Cantor (R-Virginia). Cantor's bill "would ease rules on eligibility and how much you could contribute, which would increase participation," Ripperger says. Companion bills in the Senate are "a lot different" than the ones in the House, he points out, "so we'll have to see what comes out in the compromise committee." Whatever the outcome, Ripperger predicts there will be enhancements made to HSAs that would lead The Principal to respond by hitting the road with another educational campaign targeted at advisors in 2007.
For the last two years, the company has been educating advisors on how to position HSAs with their clients by detailing the accounts' pros and cons. This year, it's telling advisors how to educate clients about the importance of "getting people engaged in making better health decisions," Ripperger says, not just selling them a product. Part of that initiative includes working with employers to alter the mindset of what The Principal calls "sick care" to "health care." Ripperger cites research emanating from the U.S. Surgeon General that the United States only spends 5% of the $1.4 trillion devoted to healthcare each year on prevention and wellness. "The other 95% goes to direct medical services," according to Ripperger, "which the Surgeon General says are the treatments of chronic, acute, or catastrophic conditions."
For advisors, the world of consumer driven health plans like HSAs has gotten "a whole lot more complicated very quickly," Ripperger says. "They are hungry for education and sales strategies and are looking for help." When talking with advisors, he's noticed that they fall into one of two categories. There are those that take an offensive strategy because they "see HSAs as the biggest opportunity they've ever had in the employee benefits space to increase their market share." The other category is advisors that fear losing clients to other professionals who are themselves already up to speed on HSAs and other consumer-driven health plans. "Even if an advisor knows a client isn't ready for these [types of plans]," Ripperger counsels, "they have to talk about them."