Health savings accounts

Employers are facing significant increases in medical and pharmacy costs.

Employees are demanding more access and control in determining how their employee benefit dollars are invested. And demographic shifts are driving the need for greater customization in medical benefit offerings.

All of this has resulted in a major shift in the health care marketplace toward greater consumerism, and employers are open to new products — including the health savings account (HSA) — that represent this shift.

The HSA reflects consumer preferences for more choice and control over health care, along with an increase in information and other tools to help consumers make those choices more effectively.

Under this type of plan, the employer provides each employee with an account up to a certain dollar limit, which employees use to cover medical expenses subject to the health plan deductible or other qualified medical expenses. For those who do not use the full amount in the health savings account, the funds can roll over.

Employees who use the entire employer-funded account in a given year are responsible for costs over that amount up to the plan deductible amount. The medical plan provides coverage when the annual deductible has been met. In addition, the savings account allows consumers to receive care from the providers they choose.

While the specifics of an HSA vary, the typical plan includes an employer contribution to the health savings account equal to 50 percent to 75 percent of the deductible amount, which ranges from $1,000 to $4,000 for individuals and two to three times that for families.

The HSA provides for employers:

* More options for employees;

* Another tool to help contain rising benefit costs;

* A way to give employees a bigger stake in health benefit decisions and managing the cost of those benefits.

For employees, the HSA:

* Provides more choices, since savings account funds can be used with any provider they choose, although using network providers stretches dollars further;

* Creates fewer barriers to access and treatment options;

* Provides tools and information to help make informed health care decisions.

That last point is essential. Decision support tools are an important feature of any health savings account product and should include a 24-hour health information line and access to personalized Web-based information.

Armed with more and better information about quality and costs, and with incentives to apply that information to health care decisions, consumers can make better choices about their providers and treatment options, not just in terms of cost but in terms of quality.

And because preventive care helps members maintain good health — and employers maintain a healthy work force — it should be included as a basic component of any health savings account product.

Some call the health savings account revolutionary, but it may be more accurate to call it the next step in the evolution of benefit plan design, answering the consumer’s desire for more choices and control over their health care.

At the same time, it meets the needs of employers looking for ways to keep health care coverage affordable for employees. Given the dynamics in the marketplace, employers will likely view the health savings account as a welcome alternative. Jeanne McCarthy is president and general manager of CIGNA HealthCare-Ohio region, headquartered in Cleveland. CIGNA HealthCare is one of the nation’s leading providers of health-benefit programs, with managed care networks serving 45 states, the District of Columbia and Puerto Rico. CIGNA HealthCare provides medical coverage through managed care and indemnity programs to more than 13.3 million people, including more than 250,000 in major Ohio markets. Reach McCarthy at (800) 541-7526.

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