Dr. HSA

Guest Columnist, Roy Ramthun

Former Economic Advisor to President Bush

New HSA Enrollment Figures Indicate Continued Strong Growth

April 2007 - Vol. 9

This month's release of the latest enrollment figures for health insurance plans associated with Health Savings Accounts (HSAs) shows continued strong enrollment growth, confirming earlier growth trends in the employer-based market for health insurance. According to survey results by America 's Health Insurance Plans (AHIP), enrollment has grown 43 percent over the last year by a total of 1.2 million people, to a total of 4.5 million Americans covered by HSA-qualified plans as of January, 2007.

More importantly, the strongest growth was in the employer group market, where most people get their health insurance coverage. In fact, HSA enrollment in the large group market tripled from one year ago, and now almost 50 percent of the current enrollment in HSA-qualified plans is in the large employer market. In the small employer market, enrollment doubled from one year ago.

HSAs continue to have broad appeal because they make health insurance more affordable for Americans. According to the AHIP survey, the best-selling HSA policies have annual premiums that are about $1,000 less for singles, and about $3,000 lower for families compared to traditional policies. Furthermore, 27 percent of individuals purchasing HSA-qualified policies in the individual market were previously uninsured. These policies appeal to young and old alike -- almost half of those enrolled in HSA-qualified plans were over age 40.

Finally, the survey shows that some concerns about HSAs remain unfounded. For example, most HSA plans provide first dollar coverage of preventive care (before the deductible is met). In addition, most plans provide disease management programs for enrollees with chronic conditions. Finally, most plans include a wide array of Web-based tools to help consumers make more informed decisions about their health care.

This strong growth indicates that HSAs are now part of the mainstream of health coverage today. With the recent expansions enacted by Congress in December, 2006, the growth should continue and will likely accelerate into the future.

Analysis

With the recent release of the March 2007 inflation figures, the inflation-adjusted amounts for health savings accounts (HSAs) for 2008 are now known, says Roy Ramthun, President of HSA Consulting Services, LLC.  "We now know all the data points to calculate the 2008 numbers for HSAs. This will give everyone offering an HSA program in 2008 much more time for planning. In past years, this information was not available until very late in the year."

"Although the inflation index for March was higher than anticipated, only one of the HSA amounts has changed from our predictions last month," says Ramthun. He says the maximum HSA contribution (not including catch-up contributions) will be $2,900 for individuals, and $5,800 for families in 2008.  The annual catch-up contribution for individuals age 55 or older is set by statute and will be $900 per person for 2008. "The good news is that the contribution limit for families is $50 higher than originally projected," says Ramthun.

For insurance plans offering HSA-qualified high deductible health plans, Ramthun says that the minimum deductible for HSA-qualified high deductible health plans (HDHPs) will remain at $1,100 for self-only coverage and $2,200 for family coverage policies in 2008. However, the out-of-pocket maximums for qualified plans will increase slightly to $5,600 for self-only policies and $11,200 for family policies.

"This means HSA-qualified plans will not have to make any changes to their plan designs because their current policies will meet the minimum deductibles and out-of-pocket limits for 2008," says Ramthun.

Now that these figures are known, companies can begin to finalize their 2008 HSA plans. Due to a change in the law, Treasury is now required to publish the final figures by June 1.

>> What's your point of view? Email Dr. HSA. We look forward to hearing from you!

Related Links:

AHIP Press Release

AHIP Survey

About the author...

Roy Ramthun is President of HSA Consulting Services, LLC, a health care consulting practice specializing in Health Savings Accounts and consumer-driven health care issues. Mr. Ramthun is also a Visiting Fellow at the Council for Affordable Health Insurance. Click here for Roy's website.