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Health savings accounts booming By Marguerite Higgins THE WASHINGTON TIMES

    The number of Americans enrolling in health savings accounts has more than doubled in the past six months, according to a survey released yesterday by a Washington health-insurer trade association. The survey, conducted by America's Health Insurance Plans, found that 1.03 million people had signed up for the plans by the end of March, a surge from the 438,000 enrolled in September.
    Health savings accounts, also known as HSAs, were introduced in January 2004. HSA policyholders pay for medical expenses from their savings accounts but are required to be covered by high-deductible health plans. Unlike other health insurance accounts that employers offer in flexible packages, known as "cafeteria" plans, the money invested in the permanent savings accounts rolls over each year for future use and earns tax-exempt interest, giving participants greater control over their medical costs and payments.
    The accounts have been promoted as a way for Americans to save money for rising out-of-pocket health care costs, and also are an incentive for consumers to stay healthier, so that they can save more money in the accounts.
    The annual upfront deductible must be at least $1,000 for individuals and $2,000 for families. Out-of-pocket expenses that are required must not exceed $5,000 for individuals and $10,000 for families. HSAs can be used with some forms of insurance, such as those for dental, vision and long-term care. The plans provide coverage that does not affect the deductible for preventive care but require higher out-of-pocket costs for non-network services. The HSA survey, which polled 99 health insurers that offer most of the available HSAs, said individuals led the demand, with 556,000 enrolled in the health plans by March. HSA coverage by large and small businesses had more than quadrupled to cover 397,000 workers by March, up from 92,000 employees covered in September, the report said.
    "The early data is very encouraging," said Karen Ignagni, the trade group's president and chief executive officer, at a press conference yesterday. Health insurance analyst Adam Miller said HSAs have the potential to increase their share in the health insurance market, primarily among larger corporations. But the success of the accounts will depend on how "the investment vehicles and high-deductible plans are structured for companies," said Mr. Miller, of New York investment bank Williams Capital Group LP. Ms. Ignagni said she had expected a jump this year in the number of companies offering HAS to their employees. HSA coverage by businesses has been limited partly because regulations for the plans were finalized by the federal government in August. With most companies in June deciding on their health plans for the following year, many passed up HSAs for 2005, Ms. Ignagni said. She would not project whether HSAs, which were heavily lobbied in Congress as an affordable way for uninsured Americans to get health coverage, would reduce the number of uninsured workers. About 45 million Americans were uninsured in 2003, according to the most recent data available from the U.S. Census Bureau. Ms. Ignagni noted that 27 percent of the individuals in the study who enrolled in the HSA said they previously had no health insurance. Additionally, 37 percent of the small businesses that bought HSA had offered no previous coverage to employees, the survey said.

NEW HEALTH SAVINGS ACCOUNTS CAN BECOME DOMINANT HEALTH CARE FINANCING IN 5 TO 10 YEARS, EXPERTS SAY COLUMBIA, Md., April 8 /PRNewswire/ --

New Health Savings Accounts (HSAs) permitted under legislation effective January 1 could well become the dominant kind of health care financing in the next five to 10 years, according to the business experts at Fiducial. Designed to help individuals save for future qualified medical and retiree health expenses on a tax-free basis, HSAs can also help build tax-sheltered nest eggs to cover out-of-pocket medical costs while allowing taxpayers to shelter up to $4,500 annually. Addendum: For the full story, go to <http://www.fiducial.com/learning_centers/2004-04-05.asp>.

Workers under age 65 can accumulate tax-free savings for lifetime health care needs if they have qualified plans. A qualified health plan has a minimum deductible of $1,000 for individuals and $2,000 for families on out-of-pocket expenses. Individuals with self-only policies have a pre-tax annual cap of $2,600 and families can make an annual contribution of up to $5,150 into an HAS account.

Presently there are only a few major HSA providers including Assurant, formerly Fortis Health of Milwaukee, which sold the first individual medical HSA policy Jan. 1. "We're seeing a very strong interest and response from both insurance agents and then consumers," said Rob Guilbert, Assurant's vice president of corporate communications. Assurant touts the tax advantages of these accounts since contributions are not taxed, the earnings on the money in the HSAs are not taxed and use of the money is tax-free for qualified health expenses. "This type of consumer choice model will definitely be the primary model for health insurance," added Guilbert.

Major health care insurers like CareFirst Blue Cross and Blue Shield, the top carrier in the Mid-Atlantic region, plan to add HSAs to its consumer directed health care plan portfolio and expects to sell them to large and small groups. "We feel HSAs will sell well in our individual markets and we plan to pursue it," said Cindy Otley, a product director with CareFirst in Owings Mills , MD. "We think the market is steadily going to move in this direction using these types of accounts."

While HSAs aren't for everyone, small business owners and individuals should check first with their tax professionals to see if these high deductible health insurance policies are a good fit. For more information about Fiducial, go to: <http://www.fiducial.com>.

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