"I think HSAs are the greatest thing since sliced bread,"
said insurance broker Kevin Cooley of San Antonio's Integrated Health
Plans. "Most clients who are open to the HSA idea are self-employed, and
they have a different view on money."
That view is one of watching every dollar and weighing
options more carefully than workers with company-provided health
benefits, low co-payments and a low deductible.
HSAs mean more out-of-pocket expenses than traditional
insurance because of the high deductible; but for those without
coverage, putting any amount toward tax-free health savings "is still
better than no coverage," Cooley said.
A family health plan in San Antonio with a $1,500
deductible and 20 percent co-payments to health providers would cost
$1,020.69 a month, under one illustration Cooley provided. That can be a
tough nut to crack every month for most families.
But with a health savings account and a higher
deductible of $5,650, the same family would pay $322 a month in premiums
and any money not spent out of the HSA would roll over into the next
year.
Managing those savings also is becoming more
sophisticated.
United Healthcare's Golden Rule Insurance Co., one of
the pioneers in the HSA field, recently launched mutual fund investment
options that provide higher returns on health savings that go unused.
After the savings account balance reaches $2,000, excess amounts can be
invested into one or more of eight no-load mutual funds.
Golden Rule spokeswoman Ellen Laden said another
advantage to the new HSA rules includes a one-time transfer from an IRA
to help fund an HSA. This is especially useful for early retirees who
are no longer covered by employer-based plans and aren't old enough to
qualify for Medicare.
The law also allows money to be moved from a flexible
spending account — the use-it-or-lose-it part of many employer-based
plans — to an HSA.
Laden said about one-third of people signing up for
health savings accounts with high-deductible plans were previously
uninsured.
In Texas, Golden Rule found that most of their HSA
clients were self-employed or a husband-and-wife business, followed by
part-time workers and farmers and ranchers.
Long-term-care insurance premiums also can be paid out
of HSA accounts beginning this year.
"There are young families that are concerned about the
braces and the eyeglasses with the HSA," Laden said. "But there are
older people who are worried about who is going to take care of them."
The growing use of the accounts is prompting new forms
of banking to deal with unexpected expenses.
For example, if a person has made one contribution to
the savings account at the beginning of the year, but gets hit with a
big deductible right away, it can create problems, said Bart Halling,
vice president for consumer-driven health products at Fiserv.
That could create a market for specialty lending
against future HSA contributions, he said.
"My call to action on the consumers' side is to have a
little bit longer horizon on planning for health care expenses," Halling
said. With traditional health plans, "people are used to planning in
nice one-year blocks." With HSAs, they need to plan for larger expenses
before a health event, he said.
Hillje said the health savings account has made him
think differently about medical expenses.
"The HSA has just made it more workable for a
self-employed person," Hillje said. And because the first few thousand
dollars of medical expenses each year will come out of his pocket, he
says the family is more cautious about how they use the health care
system.
The family still goes for regular doctor visits at
provider network discounts to stretch their dollars further, and
preventive medicine remains the way to control costs down the line.
"We don't just run to the doctor every time somebody
has a cold," Hillje said. "It makes you really think, 'Do we need to
go?'"
