Health Savings Accounts are Alive and Well and Growing
By John M. Wirtshafter, Esq.
McDonald Hopkins LLC
The era of Health Savings Accounts, commonly referred to as HSAs, began almost four years ago when President Bush signed the Medicare bill. HSAs have had an explosion of growth since that time. The Department of Treasury estimates that from 2004, when 438,000 people were covered under an HSA, there has been a more than ten-fold increase; approximately 3.2 million covered individuals at the end of 2005 and close to 4.5 million enrollees by the end of 2006. The government estimates that more than 10 million individuals will be covered by HSAs by the end of this decade.
Preliminary feedback from participants in, and sponsors of, HSAs is somewhat mixed. However, sponsors and administrators that have taken the time to educate their enrollees on how their plans work and how to make good health care decisions have clearly resulted in higher satisfaction among enrollees and greater cost-savings.
Both Congress and President Bush have been eager to continue that growth. Consequently, Congress included taxpayer-friendly changes to HSAs in the Tax Relief and Health Care of Act of 2006 (the ?06 Act), and the President signed those changes into law on December 20, 2006.
An HSA is an investment account to which contributions are made. The contributions must be used for qualified medical expenses by the HSA?s beneficiary. Once an individual reaches age 65 or Medicare eligibility, contributions can be withdrawn for any reason.
There are various requirements and limitations placed on how HSAs function and who can use them.
Click to continue...
Health Reimbursement Arrangements (HRAs)
Cost Saving Strategies Using Consumer-Directed Health Plans
By Richard J. Hughes, CEBS
A Health Reimbursement Arrangement (HRA) is a type of consumer-based healthcare plan that combines a high deductible health plan with a Personal Care Account (PCA) that is partially-funded by the Company as claims are incurred. The HRA is similar to the Health Savings Account (HSA) but with several key differences.
How does it work?
Click to continue...
One Cleveland-based company with about 50 employees has used a unique version of the Health Reimbursement Arrangement (HRA) since 2005. It?s referred to as a ?Split-Funded? plan and it has allowed them to keep their 2008 healthcare costs at 2005 levels. At the inception, the switch to the High-Deductible Health Plan (HDHP) created an immediate premium savings of about $150,000. Click to continue...