Financial Literacy
and high-deductible health-plan
coverage of about 1 million reported
by AHIP members in March 2005.
Cambridge, Mass.–based Forrester
Research predicts the number of
HSAs will grow to more than
6 million in 2008, driven by
burgeoning enrollment in high-deductible health plans. The firm
predicts that total HSA-related fees
will reach $1 billion in six years.
Still another indicator that more
companies will offer HSAs is the
interest from the banking and
insurance sectors. In December, the
American Bankers Association and
the American Bankers Insurance
“HSA savers will not use their
HSAs for current medical expenses,
choosing instead to pay out of pocket,
allowing their HSA assets to grow
tax-free,” Forrester’s report finds.
While businesses are eyeing
HSAs as a means to decrease their
health-insurance costs, some
employees who opted for them do
so because they expect a contribution
from their employers. But further
research indicates that some companies that offer high-deductible
HSAs do not contribute.
“The theory [behind HSAs] is
that employers would contribute
to individual accounts, but research
“[HSAs] are the only triple tax-free savings vehicle
that exists in the marketplace. But depending
on your perspective, it might not be beneficial.”
Ed Murphy, Plante & Moran
Association jointly announced the
formation of the HSA Council, an
organization of banks, insurers and
technology leaders committed to
increasing the distribution of HSAs.
HSA council members include
representatives from JPMorgan
Chase, Bank of America and Wells
Fargo, Nos. 25, 26 and 40 on The
2005 DiversityInc Top 50 Companies
for Diversity list.
“We expect HSA savers to be
predominantly white-collar professionals with sufficient disposable
income to fund the maximum
allowable amount to their HSAs
each year,” finds a report titled
“Will Health Plans Profit From
HSAs?” from Forrester Research.
Forrester suggests its technology
clients challenge banks to be
custodians of HSAs because of the
market’s potential growth.
shows that over one-third of firms
that offer HSAs don’t help out,”
says Joanne Volk, legislative representative at the AFL-CIO.
Volk is referring to the Kaiser
Family Foundation’s “Employer
Health Benefits 2005 Annual
Survey,” which indicated that
approximately one in three firms
offering an HSA-qualified high-deductible health plan made no
contribution to employee HSAs.
As deductibles increase, enrolling
in a health-insurance program could
be less attractive for individuals and
small-business owners.
“I estimate that these proposals
will on net raise the number of
uninsured [by 600,000 persons],
as those left uninsured through firm
dropping of insurance exceed those
who gain insurance through taking
up tax-subsidized high-deductible
plans attached to HSAs,” says
Jonathan Gruber, a Massachusetts
Institute of Technology researcher,
in a report for the Center on Budget
and Policy Priorities.
Gruber estimates that the number of people with employer-provided insurance will decrease by 8. 9
million people because HSAs erode
the benefit a business receives for
offering insurance coverage.
Currently, employers receive tax
advantages when they offer insurance because employer-provided
insurance premiums are not taxed.
High-deductible HSA plans will
increase the number of non-group
insured by 8. 3 million people,
estimates Gruber.
“[High-deductible HSAs] will
remove that tax advantage …
causing some employers (typically
small employers) to stop offering
insurance coverage to their
employees,” writes Gruber. “Only
about half of those employees
[who were] dropped from employer-provided insurance enroll elsewhere, 4 million in non-group
insurance and 0.5 million in
Medicaid. The remaining 4. 4 million become uninsured.”
Whether an HSA is attractive is
in the eyes of the beholder.
For companies that have adopted
HSAs, early returns show that the
overall cost of healthcare has
decreased, says Murphy.
“Right now we have a system
that has insulated the typical health-benefit-plan participant from 95
percent of all expense,” says Murphy.
“When a person knows they’re faced
with a $60 or $80 doctor visit for a
routine cold that will run its course
in a 14-day period, [under an HSA
program] they may determine the
doctor is not the answer.” DI
