Since Health Savings Accounts (HSAs) were first authorized in January of 2004 as a tax-advantaged portal for medical savings, America’s Health Insurance Plans (AHIP), which is a trade association representing the health insurance industry, has conducted an annual survey of the HSA market. According the 2011 AHIP survey, HSA plan enrollment in the United States has almost doubled over the last three years, going from 6.1 million participants in 2008 to 11.4 million participants in 2011. From 2010 to 2011, the number of Americans covered by HSAs linked to high-deductible plans (HDHPs) increased by 14%.
Other key findings from the AHIP survey are:
- Large-group coverage was the fastest growing market for HSA plans between 2010 and 2011, with a growth of 26%.
- Individual market coverage was the second fastest growing market for HSA plans, with a growth of 15%.
- More than 6.3 million individuals were enrolled in HSA plans in the large-group market.
- Around 2.8 million individuals were enrolled in HSA plans in the small-group market.
- Approximately 2.4 million individuals were enrolled in HSA plans in the individual market.
The Impact Of The Patient Protection and Affordable Care Act On HSAs
As it relates to HSA plans, AHIP has noted that some of the provisions in the Patient Protection and Affordable Care Act (PPACA) could create some potential unintended consequences that might disrupt, if not limit, the availability of HSA plan coverage. Three of the main problems noted by AHIP include:
1. Medical loss ratio regulation. This requires an insurer to spend 80% or more of a consumer’s premiums on direct, non-administrative patient care and improvements to such care’s quality. AHIP asserts that medical loss ratio regulations will be especially problematic for HSA-eligible HDHPs. Participating in a qualified HDHP is a requirement to participate in an HSA. HDHPs provide individuals with a low-premium, high-deductible alternative to traditional health plans. These plans might have lower benefit costs, but they certainly aren’t always cheaper to administer from a per-enrollee standpoint. As a result, they may naturally have lower medical loss ratios.
2. Over-the-counter (OTC) medication restrictions. After 2011, funds from HSAs can’t be used to purchase OTC medications unless the individual has a prescription in hand. By limiting consumer access to many common OTC drugs, such as those used for allergies and colds, consumers will be left in default to use more expensive prescription drugs.
3. Minimum actuarial value requirement. Each level of insurance coverage (platinum, gold, silver, and bronze) sold in either the small or individual market will be required to meet a level-specific minimum actuarial value starting in 2014. The actuarial value is a dollar value based on the average benefits expected to be paid out by a particular plan. Bronze, which is the lowest level, will be required to have at least a 60% actuarial value. Under the Patient Protection and Affordable Care Act, the Secretary of Health and Human Services is to institute a process that will determine actuarial values. The health care reform law specifically instructs that the HHS Secretary may include annual employer HSA contribution amounts within the actuarial value calculation. Of course, this wording means annual employer HSA contribution amounts may not be calculated. AHIP recognizes that including this in the calculation will help to ensure continued consumer access to affordable, high-quality coverage since inclusion will considerably increase the probability that HSAs will meet the minimum requirements.
In closing, AHIP’s survey clearly reflects that HSA enrollment is steadily growing. Policymakers should recognize that HSA plans are more important than ever when it comes to U.S. consumers having access to affordable, quality coverage.
