Enrollment in high-deductible health insurance plans linked to health savings accounts continues to surge, with the biggest growth in plans offered by larger employers.
As of Jan. 1, 10 million people were enrolled in HSA-linked health insurance plans, a 25% increase in a year, according to an annual census released two weeks ago.
HSA enrollment rose in all markets, according to America's Health Insurance Plans, a trade group.
The large-employer market saw the biggest percentage gain. Employers with at least 51 employees had 5 million people in HSA-linked plans as of Jan. 1, an increase of about 33% from a year earlier.
In the small-employer market — employers with up to 50 employees, as defined in this particular survey—HSA enrollment increased to about 3 million, up about 22%.
Meanwhile, individual enrollment climbed to slightly more than 2 million people, a 12% increase.
HSAs, authorized under the 2003 federal law that added a prescription drug benefit to the Medicare program, became available Jan. 1, 2004, and enrollment has risen steadily since then. In all, AHIP estimates that 4.8% of the privately insured U.S. population younger than 65 was enrolled in HSA-linked high-deductible health plans as of Jan. 1.
The most significant factor driving HSA growth is that premiums for HDHPs, to which HSAs must be linked by law, tend to be lower than more traditional health plans that impose less cost sharing on employees.
For example, the average annual premium for family coverage provided through the best-selling HSA-linked HDHP in the large-group market was $9,767 for family coverage this year. That compares with $13,375 for employer-sponsored family coverage last year, according to a Kaiser Family Foundation survey. The Kaiser figure is based on all plan types.
Another key appeal of HSA-based plans is tax breaks that are not available with other plan designs. Employee contributions to HSAs are made on a pretax basis, can be rolled over indefinitely, earn interest tax-free and are distributed tax-free to pay uncovered health care expenses.
By contrast, employee contributions to flexible spending accounts also are pretax, and distributions are tax-free, but account balances are forfeited at the end of the year or, if an employer adopts a grace-period FSA, can be used to pay claims incurred during the first two and one-half months of the next plan year.
Still, HSA-linked plans have their drawbacks for employees, especially workers who are major users of health care services, as the arrangements impose significant employee cost sharing.
In 2010, federal rules stipulate that the deductible can't be less than $1,200 for single coverage and $2,400 for family coverage. In fact, deductibles tend to be higher than the federal minimum. The AHIP survey found that the average deductible for the best-selling plan in the large-group market is $2,203 for single coverage and $3,907 for family coverage this year.
The AHIP census is based on information reported by 93 insurers and their subsidiaries offering HSA-linked health insurance plans. AHIP said its census covers virtually all people enrolled in plans linked to HSAs.
The 2010 census is available online at ahipresearch.org.
Jerry Geisel is editor-at-large for sister publication Business Insurance.
