AHIP: HSA Market Is Growing Rapidly

HSAs already have achieved a higher level of market penetration than the old MSAs attained, Ignagni said.

An HSA program combines a high-deductible health coverage policy with a personal health account. Employers and employees can contribute pretax dollars to HSAs to cover the cost of routine medical expenses. HSA holders can roll unused contributions over from year to year.

The HSA program has been attractive because HSA-compatible policies tend to have relatively low premiums, Ignagni said.

Congress included the law that created the HSA program in a major 2003 Medicare reform bill, and the Internal Revenue Service released several batches of HSA guidance. The latest batch of IRS HSA guidance appeared in the summer of 2003.

Because employers make the majority of their health benefit decisions in the fall, HSAs arrived on the market too late for most employers to consider using them in 2004, Ignagni said.

More employers seem to be offering HSAs this year, and many carriers entered the group HSA market after AHIP completed its market survey, Ignagni said.

There are now 58 companies offering high-deductible plans to large employers, up from 15 in September, while the number of carriers selling high-deductible plans to small employers has increased to 56, from 11, Ignagni said.