SBE Council Notes Importance of Protecting HSAs

The Small Business & Entrepreneurship Council (SBE Council) today highlighted the importance of health savings accounts (HSAs) in the health care marketplace, including for small businesses, and warned that ObamaCare could place these consumer-friendly health coverage options in peril.

SBE Council President & CEO Karen Kerrigan noted: "The growing importance and popularity of HSAs were reinforced by the latest data offered from America's Health Insurance Plans, which reported that over 10 million Americans were covered by HSA-high deductible health plan products in January 2010. That was a 25 percent jump from January 2009."

According to AHIP, HSAs were up by 17 percent in the individual market, by 22 percent in small-group coverage, and by 33 percent in large-group coverage. As of January 2010, there were 2.053 million people covered by HSAs in the individual market, and 2.97 million in the small-group market. Just over the past three years, HSA enrollment has more than doubled (up by 121 percent). During that period, the increase in the small-group market registered a 181 percent.

SBE chief economist Raymond J. Keating observed: "Obviously, the growth of HSAs in the marketplace reflects their value to both individuals and small businesses. For the economy in general, HSAs are a big plus as the traditional buyer-seller relationship is re-established - with both health care providers and consumers concerned about costs, utilization and providing the proper care - while the true role of insurance is emphasized, as each HSA is linked to an HDHP, thereby protecting individuals against large and/or unforeseen costs. This is how the insurance market should work."

Kerrigan warned: "Unfortunately, ObamaCare works against HSAs. For example, starting in 2011, over-the-counter purchases and other preventative care are excluded from the list of items that consumers can purchase using HSA dollars. Even more troubling, however, is that HSAs eventually may not be considered 'acceptable coverage' under regulations that federal government bureaucrats will soon write up under the new health care bill. Quite frankly, ObamaCare works against HSAs."

Given the importance of HSAs to entrepreneurs, small businesses and consumers, SBE Council has launched a "Protect HSAs" effort. Visit SBE Council's website at http://www.sbecouncil.org/ for more information.

Small Biz Health Care Daily: Employer Savings and HSAs

Those leading the charge for more government involvement in health care have been bringing up the formidable costs faced by small businesses in providing health care coverage to their employees. There’s no denying those problems. But the questions is: What’s the solution?

The Obama administration and leaders in Congress are asserting that more government will reduce costs. How that would actually occur remains a mystery to anyone with even passing knowledge of economics and political history.

In reality, reforms that enhance competition, choice and consumer controls are what make real sense.

The Council for Affordable Health Insurance (CAHI) released a report recently that looks at how consumer driven health care – such as health savings accounts (HSAs) – actually have reduced costs.

HSAs are tax-free savings accounts linked to traditional, high-deductible health plans. Funds are deposited into the accounts by employees and/or employers. Individuals, who own their accounts, use those funds for regular, predictable health care expenses, with the high deductible health plans kicking in during years with high costs. While third-party payments (for example, from the government) for health care services drive costs higher, as neither the consumer nor the provider need to be concerned about costs and utilization, with HSAs and other consumer-based plans, the dynamic shifts. Consumers become “value-conscious shoppers in the health care marketplace,” as CAHI put it.

What are the results for employers? The CAHI report noted: “Employers … see dramatic changes with consumer driven coverage, including not only lower premiums but lower rates of growth. Premium savings vary depending on many factors, but adopting a higher deductible generally saves consumers or employers 25 to 40 percent in the price of premiums.” The report highlighted a variety of studies.

It also pointed out that HSAs are not just for the healthy, as critics assert. Findings show that HSAs benefit both the healthy and the unhealthy. Why the unhealthy? “One analysis determined that HSAs would reduce health care costs for people with high medical expenses because the out-of-pocket exposure is limited and people reach 100 percent coverage faster than they do in other forms of coverage.”

So, what makes sense – more government, or more consumer control?

Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council

HSAs: The Right Health Coverage Fit For You?

According to America’s Health Insurance Plans (AHIP), there are 6.1 million health savings accounts (HSA) set up in the United States. Small businesses, in particular, have been drawn to HSA plans as 31 percent that have opted for this coverage were previously without insurance. So -- is the HSA option a good fit for you?

At a House congressional hearing on HSAs last month, a Harvard professor essentially testified that most Americans were too dim to own a HSA. Are you? There are plenty of resources available for you to help make that decision.

Roy Ramthun (“Mr. HSA”) has announced that in addition to his FREE booklet – “The Common Sense Guide to HSAs” – that he recently released (it can be downloaded at http://www.hsaed.com/) he has also published a Spanish version of the guide – “Manual de sentido común Cuentas de Ahorros para la Salud.” Both of the guides are designed to help consumers better understand HSAs. There is a fee for the Spanish version.

In addition to basic information about HSAs, the guides explain how HSAs compare to traditional health insurance, and how to determine whether a HSA is right for an individual or family.

Ramthun is also hosting a one hour HSA webinar on Wednesday, June 25th at 12:00 noon ET (11:00 am CT, 10:00 am MT, 9:00 am PT) to explain the new IRS guidance on IRA-to-HSA rollovers and account funding issues. The webinar will provide an opportunity for Q&A. The cost of the webinar is $35. To sign up, visit http://www.hsaed.com/. For those who attend the webinar, the Spanish version of the guide book will be sent FREE of charge.

Many small business owners that we talk to say that HSAs are an affordable, flexible option to traditional health coverage. Employees also love them as they have more choice in the health and medical marketplace. They also serve as another vehicle for saving money. Millions of Americans are jumping on the HSA bandwagon. Check it out to see if it makes sense for you, or your business.