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More HSAs in 2006 Predicted

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More employers are planning to offer Health Savings Accounts in 2006, according to a survey published today.

A total of 32% of survey respondents plan to offer them next year, compared to 7% this year.

The survey, sponsored by the Mellon’s Human Resource and Investor Solutions, Ridgefield Park, N.J., revealed that the vast majority of the employers adopting HSAs are adding them as an option for employees, while just 2% plan them as total replacement. A total of 66% of employers expect to contribute to the accounts.

The survey looked at more than 360 employers averaging 9,000 employees.

On average, 16% of eligible employees are enrolled in HSAs.

“Small employers and individual consumers are leading the HSA charge this year,” said Brad Engel, national health and welfare product leader with HR&IS. “But 2006 will see an explosion of HSAs, with many more large employers adding them to their benefits package.”

HSAs were authorized by the Medicare Prescription Drug, Improvement and Modernization Act of 2003. They are portable health savings accounts consumers can use to pay for qualified medical expenses. The are offered in conjunction with a high-deductible health plan that provides security against catastrophic costs.

The survey also showed that 16% offer Health Reimbursement Arrangements and 20% plan to add them next year.

HRAs are employer-sponsored plans that are similar to flexible spending accounts, except that employees may roll over unused balances at year’s end. They are funded with employer dollars, not employee salary reductions.

Of employers that have not yet implemented HRAs, 53% are likely to skip them and instead adopt HSAs.

“Plan sponsors are going directly to health savings accounts because employees and other plan members view them positively, seeing them as their own money,” Engel said.


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