First HMO and PPO, now HSA

Employers offering savings accounts double rate of 2006

Joyzelle Davis, Rocky Mountain News

Tuesday, November 6, 2007

As open-enrollment season for health care benefits is under way at most Colorado companies, a number of employees are adding the term HSAs to their ever-growing jumble of acronyms.

Open enrollment, typically a two-week period in late October or November at most companies, gives workers the chance to re-evaluate their health insurance plans and other benefits.

Some 15 percent of Colorado employers offer, or plan to offer, a health-savings account - or HSA - for next year's health care plans, more than twice as many as last year, said the Mountain States Employers Council. Nationwide, about 20 percent of companies plan to offer HSAs, according to Hewitt Associates.

"This is a way of passing more of the cost to employees, but it also allows the employee to have more control over their destiny," said John Martie, president and general manager of Anthem Blue Cross Blue Shield in Colorado.

HSAs, introduced by federal legislation in 2004, are like a 401(k) for health care. They allow employees to save for medical expenses with pretax dollars, and they're portable. The excess rolls over year after year, and employees take it with them to a new job or if they retire. The kicker is that workers are responsible for 100 percent of their health care costs, including drugs and office visits, until they meet their deductible, which can be as high as $10,500 for a family.

Employers like the plans because they help temper ever-escalating health care expenses. The average company will shell out $9,312 per employee in health care costs in 2008, an increase of 45 percent from 2003, said human resources firm Towers Perrin.

Workers are more wary. Just 3 percent of employees chose such plans last year, Hewitt said, although most companies think that number will grow to 20 percent within five years.

Most employees react with "confusion" when first hearing about the HSA option, and think, "Oh no, I don't have insurance," said Dawn Ned, an account manager at Anthem. "They don't really feel the benefit until they're a couple of years into it" and start to see their HSA egg grow.

A study released by the Bell Policy Center found that health savings accounts benefit high-income workers while offering scant incentive to low-income families, who have little or no tax liability.

"It really depends on the health history of your employees," said Patty Goodwin, director of surveys for Mountain States. "For people who don't use their health care a lot, this is great. It allows them to put money aside for when they do need it."

Employers are trying to make HSAs more attractive by offering employees seed money, typically ranging from covering 33 percent to half the deductible, said Leslie Andrews, president for Humana's Colorado market.

"A lot of employers are recognizing that without the seed, the deductible is too intimidating," she said. Most employers offer a seed for the first two or three years, then restrict it to employees below a certain income level, she said.

Beyond HSAs, employers are taking other measures to curtail costs. Some employers are charging extra to extend coverage to workers' spouses if those spouses are covered by their own employers' plans, or are refusing to extend coverage altogether.

Wellness programs also continue to gain strength, as employers offer everything from discounts on premiums to gift certificates as motivation for employees to exercise more, eat better and quit smoking.

"One of the biggest discussion points we have right now is the challenge most employers have trying to get employees involved in wellness programs," Andrews said.

Closer look at HSAs

Web sites with more information on health savings accounts and picking a health care plan:

• U.S. Treasury Web site with links to how to transition to HSA, frequently asked questions and basics of the plan: treas.gov/offices/ public-affairs/hsa/

• Sponsored by Humana, this site helps individuals and families calculate their health care costs: familyhealth budget.com/FHBNET/ global/about.aspx

davisj@RockyMountainNews.com or 303-892-2514