Tag: HSA growth

Breakthrough Study Sees 50 Million In HSAs

Editor Note: This article was originally published March 18, 2014 and can be found here.

A new Interpro Publications analysis of national HSA [Health Savings Account] studies over the past 5 years projects that up to 50 million Americans will have an HSA account by 2020 versus 22 million today. This is the first national study of HSAs to make projections of how fast the product is growing. It was conducted in response to multiple requests by employers for HSA performance data during the current contract negotiations for 2015.

“In the first decade after HSAs were created by Congress they grew steadily by about 2 million people per year, but in the past 18 months this has accelerated,” said Interpro Publisher William Boyles.

The health reform law has had little if any impact on growth of HSAs, and in most states HSAs are offered alongside other options with competitive premiums, a December study found.

Learn more about Health Savings Accounts and Sterling Health Services.

HSA Growth: Still Strong 10 Years Later & Poised to Grow Under ACA and Exchanges

by Chris Bettner

Editor Note: This article was written by Sterling’s EVP of Business Development Chris Bettner and published in the March 2014 edition of California Broker Magazine.

Health savings accounts (HSAs) will have the highest growth rate among all consumer driven healthcare accounts (CDH) in 2014, according to the Consumer Driven Health Care Institute (CDHCI). HSAs are expected to hit close to 21 million covered lives. By mid-2013, there are expected to be 18 million HSAs with assets hitting $18.1 billion and growing.

National carriers and economists confirm that HSAs are the product to watch in 2014. Growth in private exchanges, based on employer defined contributions, should accelerate HSA growth. The fear that the Affordable Care Act (ACA) would crush HSAs has been put to rest in a private study by HSA Consulting Services (December 5, 2013). The study states conclusively that HSAs will do well on the federally run exchanges. The plans are widely available and attractively priced. HSA eligible plans are 11% less expensive than older legacy plans; and families save an average of over $1,000 a year on premiums, according a report by CDHCI. Forty-four percent of the Bronze plans are HSA compatible, a critical indicator.

Cost is not the only growth factor. The basic tenants of HDHP/HSA lead people to become savvy healthcare consumers. This has been reported for the 10 years that HSAs have been available (since 2004). People make more thoughtful decisions on their healthcare spending. This does not mean that people do not get necessary care. Quite the contrary; people ask for generic medication; use emergency rooms for true emergencies; and use preventive care services at a much higher rate than do their counterparts in other products.

The triple tax advantages of a HSA, unlike a Roth IRA, never appear as income when deducted from payroll. So people have the tax advantage of money going into the account pre-tax, growing tax-free and, when used for qualified medical expenses, being used tax-free as well. Some people with a HSA never make withdrawals to cover medical expenses. These people, Baby Boomers for the most part, consider their HSA a retirement account. Other people use the money each year to pay for their deductible expenses. That’s the beauty of a HSA. They are extremely flexible, triple tax advantaged accounts.

The investment opportunity with a HSA is only limited by IRS regulations. The instrument must be liquid (stocks, bonds, mutual funds). The ability to invest is very flexible but determined by your HSA administrator. Year-over-year growth of balances in these accounts proves that people really will walk into Medicare with a nest egg.

About Chris Bettner
With over 30 years of experience in healthcare sales and management with health insurance carriers, Chris Bettner serves as executive vice president of Business Development for Sterling Health Services Administration and was a co-founder of the company in 2004. Prior to joining Sterling, Chris was Vice President of Sales for Blue Shield of California. She held similar positions at Lifeguard, FHP, Independence Blue Cross and MetLife. Chris is also a national spokesperson on HSAs and consumer directed healthcare programs.

How Consumer Driven Plans Are Picking Up Steam in Today’s Market

by Chris Bettner

Editor Note: This article was written by Sterling’s EVP of Business Development Chris Bettner and published in the March 2013 edition of California Broker Magazine.

The year 2013 could be very good for consumer directed health plans (CDHPs). In fact, many signs point to growth over the next few years. Employers are likely to migrate into CDHPs as brokers across the country report double-digit rate increases. Growth may be concentrated in the mid- and large-group markets in 2014 if smaller employers default to the exchanges.

PPOs are the number one health plan choice in the United States; CDHPs are number two; and HMOs are number three, which marks a significant change over time. CDHPs got a last minute push, in 2012, as employers responded to rate increases. CDHPs have doubled in number over the past three years. Seventeen percent of workers were enrolled in a CDHP in 2011; up from 8% in 2008, according to the Dept. of Health and Human Services. Enrollment increased 23% year-over-year, which equates to 5.3 million enrollees since 2008. In addition, some banks that offer HSAs doubled their total accounts in 2012. Assets in HSAs are rising along with the percentage of HSA assets as investments.

Private exchanges may be a significant source of growth in CDHPs as employers and employees leverage the technology of the open marketplace. When defined contribution is used, online purchasing will become more acceptable to employers and employees. A user-friendly online experience will draw both employers and employees if it can simplify complex decision-making.

Several large companies, such as JetBlue, IBM, and Caterpillar, have contributed healthy behavior incentive payments to their employees’ HSAs or HRAs. Eighty percent of companies planned to use incentives in this fashion in 2012, according to a recent Towers Watson study. Many companies are considering the ROI of tying incentives to healthy behavior programs. Millions of dollars may be saved when employees become savvy healthcare consumers since they are spending their own money in HSAs and HRAs.

The healthcare industry is changing dramatically as ACA final regulations are being hammered out, but the threat of the Patient Protection and Affordable Care Act (PPACA) and the Exchange option seem to be behind us as it relates to CDHPs and health savings accounts (HSAs).

About Chris Bettner
Chris Bettner serves as executive vice president of Business Development for Sterling Health Services Administration. With over 30 years of experience in healthcare sales and management with health insurance carriers, she was a co-founder of the company in 2004. Prior to joining Sterling, Chris was Vice President of Sales for Blue Shield of California. She held similar positions at Lifeguard, FHP, Independence Blue Cross and MetLife. Chris is also a national spokesperson on HSAs and consumer directed healthcare programs.