Health Savings Accounts, or HSAs, have been around for a while now. Congress created them in 2003 as part of the Medicare Prescription Drug, Improvement and Modernization Act. They are designed to put consumers in control of their health care spending – and savings. Now, a new study confirms the design is working. Consumer behavior is shifting to be more cost and health-conscious when they participate in high-deductible plans, coupled with an HSA.
The survey results, commissioned by ACS, a Xerox Company and conducted by Buck Consultants, shows consumers in HSAs are starting to grasp their role in controlling health care costs. “HSAs are doing more than just saving consumers and employers money. They are prompting a shift in behavior that is helping employees make better decisions about their own health care,” said Tom Hricik, principal, The ACS|HSA Solution.
Three-quarters of respondents say the ability to personally control their own health costs is an “extremely” or “very important” benefit of HSAs. Not only are account holders setting aside more money than before they had an HSA (54 percent), but they are also engaging in healthier lifestyle choices (18 percent), researching preventive care programs (18 percent), shopping for lower-priced prescription drugs (28 percent), and planning health care better throughout the year (31 percent).
Employees are benefitting from more education about being a smart health care consumer both in terms of making healthier life style choices and in saving money. But they’re not the only one’s saving – employers are also noticing a reduction in costs. High-deductible health plans (HDHPs) are less costly to employers for both individual and family coverage. For example, the average direct cost for an employer to provide an HDHP with an HSA is nearly $5,500 for individuals and $10,000 for families. A real savings compared to the cost of PPO plans that come in around $7,100 for individuals and $10,700 for families.
Other interesting findings include that 72 percent of HSA participants actively chose a health plan with a health savings account even though other plan options existed. Eighty-two percent of HSA participants said the ability to save tax-free was “extremely” or “very important” in selecting an HSA-qualified plan. HSAs offer triple tax advantages. Money is not taxed when it is contributed to the plan (by employer or employee), earnings are not taxed, and it is not taxed when it is withdrawn from the account to pay for qualified expenses.
For both reasons – cost savings and positive behavior trends – employers are reporting they are likely to continue to offer HDHPs with HSAs. Only 6 percent reported they were very likely to discontinue the plans and only 7 percent said they would be very likely to move to health care exchanges in the future.
Hricik believes these positives trends in cost savings will make it easier for employers to continue offering competitive health care options for employees.
Michelle Hicks is a communications consultant with Buck Consultants.