Marty Trussell, a benefits professional wrote this article for BenefitsPro for their July 30 on line edition. The more I read it the more I felt compelled to address his reasons.
- HSAs are not instantly financed. Unlike a Flexible Spending Account, more often the Health Savings Account is ‘financed’ per pay period or monthly. This makes it difficult to ‘spend’ it immediately says Trussell. However, remember you can make payments on provider and facility charges. Also, let’s say it’s a non medical expense like glasses. You can purchase the glasses out of your pocket, once the money is in your health savings account at a later date, you can reimburse YOURSELF with no time limit for reimbursement.
- No prescription drug copays. It is true, payment for prescription drugs is the contracted retail pricing. As Trussell indicated, consumers are used to paying $20 for a prescription with NO understanding of the true cost. But being prudent also has its advantages. Ask the doctor when in his office if he has samples, or having them write the prescription from the Generic Consumer Lists available at the likes of Wal Mart, Target, etc.
- High deductibles are high. This one bothered me the most. Deductibles for health savings accounts usually are most cost effective at $2,500 for a single person and $5,000 for a family. What Trussell doesn’t express is that the family deductible is ‘community’. This means all medical and prescription drug charges for ALL family members apply to the family deductible. One person could meet the whole deductible (step off the corner and break an ankle) or a combination of all the family members add up together to meet the deductible. On ‘traditional’ style plans, it usually takes three family members each meeting a deductible for the family to be met. An average deductible and out of pocket are $1,500 for deductible with 20% coinsurance to $3,000, multiply that by 3 family members and you have $9,000 maximum expense in a calendar year. Under the Health Savings Account community deductible the maximum exposure is $5,000, so $4,000 of RISK has been averted. If you are someone who is a middle or low user, this is not paying for something you don’t use.
- 213(d) confusion. This is the part of the IRS Code detailing the allowable expenditures. Again, Trussell is right in that no one carries a ‘list’ of what’s allowable or not in their pocket. On average, I am confident that consumers know the basics. Those services provided that are covered by the health plan and prescription drugs. In 2011 the current president removed Over the Counter medications from the allowable expenses. There are many ways to find what expenses qualify. www.hsaed.com is written by Roy Ramthum, “Mr. HSA”, the professional HSA consultant who wrote the language for health savings accounts for President Bush.
- Education Gap. Finally, a point that I completely agree with Mr. Trussell. Education regarding the health savings account is critical. If employees and individuals do not understand how to use the format they will not like the benefit design. When the agent does their job proficiently, a consumer has an understanding of usage, collection of receipts etc… and will find the style of coverage to be worthwhile.
In the last year alone, health savings account usage has increased 18% to almost 15 million individuals and families. The state of Indiana offered the health savings account next to the traditional ‘cadillac’ health plan beginning in 2006. In 2012, over 90% of the 28,000 state employees have accepted the consumer driven healthcare plan. Mitch Daniels, the governor, is no slouch with the money. Each employee is given a yearly contribution to the health savings account and as of November 2011 the average health savings account balance was $10k.
Finally, the health savings account utilizes and promotes the 100% paid preventive benefit provision enacted in 2010. This benefit is crucial for consumers in that they utilize preventive benefits to find medical issues early so treatment is less expensive.
As a health savings account consumer with a family of eight on the plan, consumer driven healthcare has truly been beneficial for us. We’ve even had that ‘bad year’ when we maxed out the deductible, and yes, I am still making payments on that. The good news is the premium I have not wasted over the three years of having this plan has well been spent over and over.
Janis Van Ahn, Owner