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Life Health > Health Insurance > Health Insurance

HSAs: The Deer Are Moving

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Health savings accounts (HSAs) survived the health bill battle of 2010.

Republicans say HSAs are still in peril, but Dr. Stephen Neeleman, chief executive officer of HealthEquity Inc., a Draper, Utah, HSA administration firm, says he is comfortable with the changes made by the Patient Protection and Affordable Care Act (PPACA).

“There’s really nothing onerous in there for health savings accounts,” Neeleman says.

Earlier, when Democrats were backing a version of the health bill that could have eliminated HSAs “we had a lot of deer in the headlights when we were going to talk to employers,” Neeleman says. Now, he says, employers seem more decisive.

Todd Berkley, HSA business leader at Optum Health Financial Services, a unit of UnitedHealth Group Inc., Minnetonka, Minn., that has $1 billion in 600,000 personal health accounts, says the business was growing rapidly.

“Last year,” he says, “there was a little more uncertainty.” Now, he says, he expects growth to accelerate.

Health savings account programs combine high-deductible health insurance coverage with personal health accounts. Either employers or employees can fund the accounts, and individuals can set up HSA programs on their own.

For 2010, the minimum deductible for an HSA-compatible plan is $1,200 for self-only coverage and $2,400 for family coverage. The maximum contribution is $3,050 for self-only coverage and $6,150 for a family.

HSA-compatible plans can offer no-deductible, “first dollar” coverage for preventive care, such as vaccinations and checkups, without violating the minimum deductible rules.

HSA holders own the assets in the accounts and can build up substantial sums over time.

Enrollment in HSA-compatible insurance plans has increased to 10 million earlier this year, from 1 million in March 2005, according to America’s Health Insurance Plans, Washington.

Financial institutions are providing 5.7 million HSA accounts, according to Roy Ramthun, president of HSA Consulting Services L.L.C., Washington.

House Republicans are making protecting the HSA system a campaign season talking point. The House Republic Conference has attacked one PPACA provision that tightens limits on use of HSA funds to buy over-the-counter drugs and another PPACA provision that increases the penalty tax on holders who use HSA funds for non-HSA purposes to 20%, from 10%.

House Republicans say Obama administration efforts to implement other PPACA provisions, such as the minimum medical loss ratio requirements, could also hurt HSA programs.

Paul Fronstin, a senior research associate at the Employee Benefits Research Institute, Washington, says Democrats are unlikely to make direct attacks on HSAs. “I think they have their hands full,” Fronstin says.

Ramthun says one major PPACA component – a health insurance exchange distribution system that is set to open in 2014 – could help HSAs, because HSA-compatible coverage is usually cheaper than comparable traditional coverage.

“Once the employees (not the employer) are choosing their health insurance, most of them could gravitate to the cheapest plans,” Ramthun says in a presentation prepared for a meeting organized by Health Information and Management Systems, Chicago.

Many Republicans and some Democrats, including Sen. Ben Nelson, D-Neb., and Rep. Betsy Markey, D-Colo., say using HSAs to “give patients skin in the game” encourages consumers to take better care of themselves, avoid unnecessary use of medical services, and do a better job of shopping for health care services.

“It appears that what HSAs do is a lot of what health reform is meant to do,” Berkley says.

Some Democrats have suggested that high deductibles could discourage HSA holders from getting the kind of care that keeps small health problems from turning into big problems. In October 2009, as health bill negotiations were heating up, the House Energy and Commerce Committee brought in a witness, Nathan Wilkes, who testified that a co-worker with an unfunded HSA and a bad cut had persuaded a friend to sew him up on a kitchen table.

But researchers at the Commonwealth Fund, New York, say the mean deductible for traditional single coverage at employers with 3 to 199 employees was $1,040 in 2009 – just $160 away from the minimum HSA-compatible deductible.

Neeleman, a surgeon as well as a Health Equity executive, says his office manager likes seeing patients with HSAs, because she knows those patients have a way to pay their deductibles.

Berkley says employer matching contributions are the key to ensuring that employees fund HSAs. “If you can only do one thing, fund that account,” Berkley says.


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