Benefits & Compensation News

Don’t ditch HSA plans just yet

Don’t be too hasty to write off health savings accounts as a means to reduce your health costs. There’s finally some good news.

A few years ago, health savings accounts (HSAs) were hailed by some as the most promising solution to the sky-high health costs. Nowadays, they’re seen by many as a flop – bogged down in IRS red tape and useless to all but young, healthy, and/or high-income employees.

But a recent insurance industry study by America’s Health Insurance Plans’ Center (AHIP) discovered a 37% increase in HSA enrollments over the last year. Key reasons:

  • The growth of wellness programs has helped make HSAs more realistic for employees enrolled in high-deductible health plans
  • More employers are willing to contribute to employees’ HSAs, providing a stronger enrollment incentive, and
  • Employees are getting the hang of managing their own accounts.The average HSA contribution in 2007 was $1,380 for the year. The average total deduction was $1,080.

A powerful combo with wellness

In general, the employers that have had the greatest success getting employees to sign up for health savings accounts have been firms with wellness programs.

But the wellness program needs time to do its thing before employees are ready for HSAs. One report suggests that the wellness program should be in place at least two – and preferably three – years before the HSA is likely to get widespread buy-in and help moderate or cut costs.

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  • Kim

    HSA’s are a flop????? Where have you been? Implementing an HSA health plan 3 years ago literally stopped our health plan costs from spiraling out of control. As the HR Director for a small, <50 employee, Kansas manufacturing plant, I have seen first-hand how the HSA has not only saved the company AND OUR EMPLOYEES money … but EVERYONE is taking control of their health care. And – We DO NOT have a Wellness Program. We have seen DECREASES in our premiums for 3 years straight … This while our old traditional plan now costs at least 50% more than what we’re paying now. That said, there certainly is a “right” way and a “wrong” way to implement an HSA. Our owners knew this was the way they had to go & matched employee contributions 100% for the 1st 2 years. We’re @ 75% match now. It’s imperative to match contributions & put your employee’s at ease. We also made sure that wellness visits were covered – we certainly didn’t want employees not taking care of themselves. Lastly, EDUCATION is the biggest part. You must demonstrate to employees not only what it is, what the savings will be, but HOW IT WORKS!

  • Audra

    Our company recently added HSA’s with a compatible high deductible health plan. The reason for doing so had absolutely nothing to do with wellness programs. In fact, we tried a wellness program a couple years ago and then our premiums went up 80%!! As a result, last year we went to a lesser plan with a $250 deductible. This past year our premium on the lesser plan went up 40%!! Now this year we were forced to go to an even lesser plan – a $2,600 deductible. The monthly premium for the plan is $535!! The company is only kicking in $15 per month to the HSA. So, don’t be so quick to judge why there is a 37% increase in HSA’s. I would assume that one of the main reasons is because better plans have become completely unaffordable and employers are forced to offer lesser plans. Unfortunately, all the wellness programs in the world cannot eliminate chronic employee diseases (diabetes, HIV/AIDS, cancer) that are the true culprit of astronomical premium increases (especially if you work for a company with 50 or less employees).

  • Nick W.

    I work for a nonrpofit with 450 employees. Each year we dread how much our health care premiums are going to rise. Each year for the last five years our health care premium as increased double digits.

    The health care system in the US is broken. Passing the increased costs of health care to our employees in unrealistic. We need the kind of health care in this country that all industrialized countries have – national health care.

    The study cited in the article was done by an orgainzation with all major health insurance companies in it’s board – http://www.ahip.org/content/default.aspx?bc=31|42|54

    Thet have nothing to lose by churning out these “studies”.

  • Sophie

    Nick, if I may be so bold — Don’t fool yourself… If you think that we should go to a national health care system then be prepared for some “adjustments” to your current healthcare experiences. Among these changes will be extremely long waits to see a doctor (no matter what your reason for going), as well as, substandard healthcare.

    Americans, in my opinion, do not realize what they have. Be satisfied that you have a company that offers you an insurance plan at all. It would be insane to think that a national healthcare system would be in the best interest of America. I know the Democrats are “selling” this program; however, think of this before you jump on the band wagon.

    1) Have you ever been on state aid or (for medical care)?
    2) If so, what was covered, what wasn’t covered, how was your prescription coverage?
    3) With the state of the economy and the government footing the bill for this so-called healthcare plan, do you think that the doctors will be paid what they are used to being paid?
    4) If not, how many of those doctors will continue to practice medicine in the US or at all?
    5) If doctors stop practicing medicine, how much longer will the wait be to see a doctor when you really need it.

    The rich have more money than the poor. That is called “life”. I am not rich, I probably will never be rich — and I am okay with this. I choose to PAY for a better medical plan because the health and welfare of my family is of the uttmost importance to me. IT IS WORTH IT. I am not going to say that the government should feel bad for me and supply me with insurance FOR FREE so that I can go get my nails done or buy that Gucci purse.

    GET OVER IT !!!