EMPLOYEE
BENEFIT HEALTHCARE TRENDS - HEALTH SAVINGS ACCOUNTS
By Jim Wisdom, CFP
Since Consumer
Driven Health Plans were introduced in the last few years, there
has been relatively little data regarding the success and satisfaction
of these plans. However, recent studies are beginning to show
why these new health insurance plans (particularly Health Savings
Accounts or H.S.A.'s for short) are now the fastest growing plans
in the U.S.
A Health Savings
Account insurance plan has two components: The insurance component,
which is a high deductible health plan (HDHP) and the H.S.A. component,
which is often referred to as a "Health Care IRA." Unlike
most health insurance plans, which often have a low deductible
and high premiums, a Health Savings Account has just the opposite:
High deductible with low premiums. When an individual is approved
for a High Deductible Health Plan, he or she becomes eligible
to open an H.S.A. at a financial institution.
A recent study
by the Blue Cross Blue Shield Association, which is a network
of forty independent and locally owned and operated Blue Cross
and Blue Shield companies that provide health coverage for 93
Million Americans (nearly one in three) found that Consumer Driven
Health Plans ( including Health Savings Accounts) had a high rate
of customer satisfaction. The study revealed the following:
1) Satisfaction
levels consistently are higher for H.S.A.-eligible enrollees
than traditional ( non-CDHP) enrollees. Not only is overall
satisfaction higher with these plans, but more H.S.A.-eligible
enrollees have increased their satisfaction levels over the
past year and they are more likely to recommend such plans to
their peers.
2) Twice as many previously uninsured consumers are now covered
by H.S.A.-eligible products versus traditional products.
3) H.S.A.-eligible enrollees are of all ages and are of no different
health status than people enrolled in traditional coverage.
4) H.S.A.-eligible enrollees are more likely to seek information
and use services than non-CDHP enrollees. This is a logical
and encouraging sign. With traditional health insurance plans,
only one out of every six health care dollars is paid for by
the consumer. However, because H.S.A. funds are owned by the
consumer, H.S.A. enrollees now are seeking online resources
and decision support tools that compare cost and quality. There
are indications that this market trend toward additional online
educational health support tools will experience rapid growth
in the near future.
5) In summary, the survey indicates that H.S.A. eligible coverage
appeals to a broad consumer market and that the outlook for
future growth is good.
Further, this
study indicates that H.S.A. enrollees will start to invest some
of their H.S.A. funds in IRA-like investments such as stocks,
bonds and mutual funds as asset balances increase in the coming
years. Many professionals predict that the growth of H.S.A.'s
will be similar to that of Individual Retirement Accounts many
years ago. In fact, at age 65, H.S.A. accounts turn into a health
care/retirement planning asset and allow for withdrawal for either
health care or retirement expenses without penalty.
Finally, many
health insurance professionals believe that H.S.A.'s could be
an excellent vehicle for helping to fund the ever-increasing health
care liability of retirees (particularly baby boomers). Economists
estimate that the future health care liability of Medicare/Medicaid
is five times that of Social Security. If Social Security becomes
insolvent, Medicare/Medicaid will become insolvent even sooner.
In addition, only about one third of employers offer any form
of retiree health care any more. Therefore, it is imperative for
future retirees to consider a financial plan to help pay for this
expanding health care liability. Health Savings Accounts could
be an excellent product to help pre-fund this future liability.
Jim Wisdom,
CFP is a Certified Financial Planner specializing in health insurance
planning and retirement planning. For more information, contact
Jim at
(818) 469-6640 or via e-mail at jwisdom@adelphia.net.
