HSA Coverage Use Grows — But Only at Large Employer Groups

The typical people now eligible to set up health savings accounts (HSAs) may now be enrollees in large-group health plans.

The number of people with HSA-compatible individual policies or HSA-compatible small-group coverage appears to be falling sharply.

Analysts at America’s Health Insurance Plans (AHIP) have published data supporting the possibility of a dramatic HSA eligibility in a new batch of health insurance issuer survey results. AHIP received responses from 52 of the 93 issuers. The issuers that participate appear to account for more than 90% of enrollment in HSA-compatible health coverage.

In 2017:

The total number of U.S. residents with HSA-compatible coverage increased 7.8% between 2016 and 2017, to 22 million, according to America’s Health Insurance Plans (AHIP).
The rate of increase was up from 2.8% between 2015 and 2016.
Large-group plan enrollees accounted for 82% of the HSA-compatible coverage enrollees in 2017, up from 78% in 2016.
Only 7% of the HSA-compatible coverage enrollees had individual major medical coverage, down from 11% in 2016, and down from 64% in 2005, when the HSA program came to life.

(Related: Growth in HSA Plan Enrollment Slows)

One problem with interpreting the data is that AHIP cannot be sure about what really happened at the dozens of issuers that declined to participate.

Another problem is that many issuers were unable to tell AHIP how many of their HSA-compatible enrollees had individual, small-group or large-group coverage. The number of HSA-compatible coverage enrollees with no available coverage type information increased to 6.1 million for 2017, from 2.3 million for 2016.

But the AHIP survey results suggest the raw number of people with HSA-compatible individual coverage may have fallen to 1.1 million in January 2017, from 1.9 million people in January 2016. If the new number is correct, the number of holders of HSA-compatible individual coverage may have sunk to the lowest level since 2006.

Similarly, the reported number of holders of HSA-compatible small-group coverage fell to 1.8 million, from 2.1 million a year earlier. The 2017 figure for use of small-group HSA-compatible coverage is the lowest that AHIP has recorded since 2008.

The law that created the HSA program took effect in 2005.

People who want to set up HSAs must buy coverage with a deductible that’s high, but not too high. For 2018, for example, the minimum deductible for an HSA-compatible policy is $1,350 for a one-person policy and $2,700 for a family policy. The maximum out-of-spending limit for an HSA-compatible self-only policy is $6,650 for one-person coverage and $13,300 for family coverage.

Commenters have suggested that, in some markets, getting an individual or small-group policy that meets HSA program requirements and also complies with the Affordable Care Act deductible, out-of-pocket spending and actuarial value requirements is difficult, or even impossible.

When AHIP conducts its survey, it looks only at sales of health insurance that’s qualified for use with HSAs, not at whether the coverage holders have actually set up HSAs. Other organizations, including the Employee Benefit Research Institute and the Henry J. Kaiser Family Foundation, collect data on the number of HSAs in use.

The government also allows employers to set up another type of personal health account, a health reimbursement arrangement (HRA), with no restrictions on plan deductibles. The federal government has eased some other types of restrictions on small employers’ use of HRAs in recent years. AHIP did not collect or report data on HRA programs. It’s possible that some of the people who were using individual or small-group coverage together with HSAs in 2016 shifted toward using non-HSA-compatible coverage and HRAs in 2017.

— Read Insurer Participation in AHIP HSA Survey Drops on ThinkAdvisor.

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