I recently read a study by Aon Consulting that shows once again how quickly the health savings accounts (HSA)-high-deductible model is growing as an alternative to traditional health plans. I’ve blogged about HSAs before, but as a reminder, an HSA enables employees to pay directly for their share of health care costs such deductibles, co-pays or other medial costs with pretax dollars, but can only be used in conjunction with a high-deductible plan. HSAs have only been around since 2004, when a federal law first allowed consumers to open HSA accounts.
Aon studied all consumer-directed health (CDH) plans. CDH plans allow routine claims to be paid from a consumer-controlled account, giving consumers greater control over their health budgets. Having payment responsibility encourages consumers to better understand the actual cost of their health care.
The Aon survey reveals that for the first time since health savings accounts (HSA) were made available in 2004, they have become the choice of more than half of the employers offering consumer-driven health (CDH) plans. Aon found that in 2009, 56 percent of all employers offering CDH plans paired them with HSAs, compared to a little less than 50 percent in the prior three years.
By contrast, only 35 percent of the employers opted for health reimbursement arrangements (HRA) in 2009, down from 44 percent three years ago. An HRA allows an employer to pay employees’ medical expenses with pretax dollars, however the employee does not have control over the account. Like HSAs, employers can only offer HRAs in conjunction with high deductible health insurance policies.
According to the Aon study, 44 percent of those surveyed currently offer CDH plans, up from 28 percent three years ago. These plan designs can be attractive to employers, especially for small businesses, because of lower insurance premiums.
I expect more employers will begin offering HSA plans as individuals become better health care consumers and play a more active role in how their health care is delivered and paid.