Health savings accounts are getting a closer look

Jan 25 2012 - 11:18pm

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Parkinson
Parkinson

Will a consumer-managed health plan really provide incentive for you to be healthier or more conscientious about what you pay for health care? It could. But with the ever-spiraling premiums of prepaid health care, that question might not matter going forward.

Consumer-driven health care plans have gained traction in recent years, with health savings accounts (HSAs) attached to high-deductible health plans (HDHPs) in the lead. In January 2011, the number of people with HSA and HDHP coverage hit 11.4 million -- or 11 times what it was in March 2005, according to America's Health Insurance Plans.

The HSA enrollee pool has grown at an annual rate of roughly 20 percent for the last several years. No doubt 2012 will see another 20 percent climb, or maybe more. A national Mercer report indicated that in five years, half of all employers will offer consumer-driven health care plans. Many of them plan to phase out traditional low-deductible plans altogether.

Uses and abuses of the health care and insurance systems aside, economic challenges have thinned employers' pocketbooks. Offering traditional health care benefits is increasingly less feasible.

In Utah, a survey by the Employer Associations of America found that 23 percent of Utah companies plan to shift a larger percentage of health care costs to employees in 2012. It's either that or cut other benefits like raises and paid time off or, for some companies, do another round of layoffs, the surveyed companies said.

The switch to consumer-managed health care hasn't been purely by employers' choice. America's Health Insurance Plans reported that, in 2010, 44 percent of employees in small businesses who had a choice between HSA/HDHPs and other types of coverage chose the HSA option.

Tax incentives and employer contributions make the HSA attractive. Nearly 70 percent of companies that sponsor HSAs provide an annual contribution, according to the Kaiser Family Foundation.

The flexibility is also attractive. Unlike cafeteria plans, the HSA is consumer-owned rather than employer-owned, and the money isn't use it or lose it. Unused funds roll forward every year. You can even use your HSA funds during a gap in health insurance coverage (you just can't contribute to the account until your high-deductible plan is back in place).

There are perks to be had at the doctor's office, too. Many health care providers offer a discount to cash-paying patients because it means they don't have to haggle with your insurance company.

Some will also work with you on price or adjust the scope of service, simply if you ask.

Whether you're an employer or a consumer, HSAs and HDHPs could be a viable way to pay for health care in the new year. If you stay healthy, you'll have a nice retirement supplement down the road.

In the meantime, you might have to give up the dental spa -- or sharpen your negotiating skills.

Scott H. Parkinson is senior vice president of retail banking at Bank of Utah. Contact him at shparkinson@bankofutah.com or 801-409-5148.

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