For all those Americans looking to put more money in their pockets and give less money to health insurers, a Health Savings Account is the plan for you. You pay a lower premium, and put the cash that would have been going to an insurer in a tax-free account with your name on it. You own the money, which you spend tax-free to meet your health insurance deductible. HSAs, which have been around since 2004, and have grown by 31 percent from 2007 to 2008. Eight million Americans now have an HSA.
In a shocker poll, there is a health care plan that nearly three quarters of those using them would recommend to their friends and families: it is an Health Savings Account.
84 percent of HSA owners say more Americans should be able to have an HSA.
91 percent say HSAs should remain an option for all Americans.
About 80% of the survey participants said the ability to save for future health care expenses is the primary reason for using an HSA.
For those who do not believe Medicare will be in the same shape it is in now, mainly because of the baby-boomers who are beginning to hit the system, then perhaps sending less cash to insurers and keeping some of it for your future health care expenses is a good idea.
It turns out those with an HSA use more preventative care than those with traditional plans, and among men the increase in the utilization of preventative care is three times of that among women. Men appear to respond better to a financial incentive, as opposed to being told, reminded (dare I say, nagged?) to go to the doctor.
When it is in their financial interest, men will go — i.e., if I don’t get whatever the issue is handled now, I will pay more later.
In addition, about 2.5 million of the 8 million people who became insured with an HSA last year, were uninsured — so HSAs are helping to solve that problem too.
The average age of an HSA health insurance policy holder is 45 years old, and the majority of those with an HSA are families. Companies like Whole Foods, Wendy’s, Microsoft, Boeing, Target and Best Buy offer HSAs, and millions people who work in small companies have an HSA. Three quarters of employers who offer HSAs give their employees half of their deductible in cash in their HSA accounts. HSA owners get a lower premium, and cash for their account. According to the Kaiser Family Foundation, the average employer contribution to the employees family plan HSA is $2,068 every year. Employees also spend less for their health premium share because the cost of a family HSA is $3,886 dollars less than a traditional PPO plan.
Unions also have HSAs. The printers at the Boston Globe, owned no less by the New York Times, have an HSA. The Boston Globe contributes $2,000 to an individual or family HSA. The individual’s deductible is $1,500 and the family deductible is $3,000. The city of Dayton in Ohio has an HSA for all its employees. Individuals get $1,500 deposited into their account, with a $2,000 deductible, and families get $2,000 in their account with a $3,000 deductible.
Once the money goes into your HSA, regardless of its source, you own it. It stays in your account year after year, until you spend it. It is not the employers money, it is yours. If you leave your job, your money goes with you.
And when you spend your own money, you are more judicious when you consume health care. 85% of the savings to employers who switched to an HSA were from a reduction in the amount of health care consumed.
For example, a woman who twisted her knee by stepping off a curb went to the doctor who said I cannot tell if you have torn your ACL or not. He gave her three options, he could cut into her knee and put a scope in and find out exactly what was wrong, or he could order her an MRI or she could ice it for three days, and see how it is after three days.
With an HSA, she asked, how much would the scope and the MRI cost? The scope was $2,300, the MRI was $900. She chose the couch. Her knee after ice and elevation, it turns out, healed perfectly. If it didn’t, she would be back at the doctor’s office, since pain is a motivator to go to see the doctor.
The woman wrote me and said, if I had had traditional insurance I would have asked for the scope and MRI just to get some value out of my high monthly premiums, and I would not have even cared or asked or known how much it would have cost.
HSAs improve everyone’s understanding of health care costs, including the doctor’s, and with an HSA the patient and doctor are the ones making the decision about the course of care together, with cost as one of the factors weighed in the decision.
President Obama has said if you like your current health care plan, under his reforms, you can keep it.
Well, HSA owners like their plans. Now it is time for President Obama to keep up his end of his campaign promise.