HSA Archives

Health Savings Accounts Reach Nearly $43 Billion in Assets as Consumers with High-Deductible Health Plans Look to Cash-in on Tax-Free Savings

Oct 23, 2017 | Laboratory News, Laboratory Pathology, Managed Care Contracts & Payer Reimbursement

Push to expand the reach of health savings plans should help consumers pay for out-of-pocket medical laboratory services and other healthcare expenses

High-deductible health plans (HDHPs) continue to impact hospitals, clinical laboratories, and anatomic pathology groups due to the strain they put on healthcare consumers who struggle to pay their medical bills. Even worse, studies show patients are skipping doctor visits and scheduled medical laboratory tests to avoid paying the full costs of the visits. That’s why the market for Health Savings Accounts (HSAs) has grown in popularity. HSAs enable patients to take control of their healthcare and plan for the inevitable bills.

And grown it has! As of June 30, there were more than 21 million HSAs in the United States, with holdings of about $43 billion in assets. That’s according to a survey by Devenir, a healthcare account investment advisory and research firm. By the end of 2019, Devenir projects the HSA market will exceed $60 billion in assets held in nearly 30 million accounts.

This steep growth curve in HSA accounts is good news for medical laboratories and pathology groups because it indicates consumers are taking advantage of these tax-advantaged savings accounts to set aside funds needed to pay their high-deductible health bills.

HSAs Help Both Patients and Provider, including Medical Laboratories

According to the survey Devenir conducted in July 2017, which primarily reflected data from the largest 100 HSA providers, the typical HSA investment account holder has a $15,146 average total balance in deposits and investments.

“We continue to see impressive HSA growth, especially amongst those HSA assets held in investments as consumers begin to understand how HSAs can help them save for both their current and future healthcare expenses,” noted Jon Robb, Devenir Senior Vice President of Research and Technology, in a statement.

HSAs were authorized by the Medicare Prescription Drug Improvement and Modernization Act of 2003 and entered the market in January 2004. Ever since the major provisions of the Affordable Care Act (ACA) came into play in 2014, HSA accounts have grown significantly in size and popularity, as have HDHPs. From 2015 to 2016, HSA accounts recorded a 22% increase in assets year over year, Devenir reported.

HSAs Could Double Under American Health Care Act

Under current law, HSA accounts must be paired with an HDHP. For 2017, the IRS has defined “high deductible” as any deductible higher than $1,300 for an individual or $2,600 for a family, so a health insurance plan must meet that threshold for a consumer to qualify for an HSA. In addition, annual contributions are capped at $3,400 individuals or $6,750 for families. Those over 55 can contribute an extra $1,000.

Devenir’s study, which drew on data from the period ending June 30, 2017, illustrates the steep growth in HSAs since 2006, and projects the growth to continue well into the decade. (Image copyright: Devenir.)

But a boom in HSA accounts may be on the horizon if Republicans succeed in replacing Obamacare. Provisions of the GOP-backed American Health Care Act (AHCA), which stalled this summer after passing by a narrow vote in the House of Representatives, would nearly double HSA contribution limits and introduce other changes that would spur growth.

“Whatever direction healthcare reform goes, it is clear that the HSA will be a key component of consumers’ financial decisions in healthcare,” wrote Steve Christenson, Executive Vice President at Ascensus, in 401K Specialist. “After all, HSAs and HDHPs were market-driven prior to the enactment of the ACA and continued to be with its passage. The economy will continue to drive this trend as employers seek to attract and retain employees in this tight job market.”

HSA contributions can be invested and grow tax free as long as withdrawals are used for qualified medical expenses. Because accounts move with healthcare consumers if they change jobs or insurers, HSAs are viewed as excellent investment options.

“HSAs offer tax breaks no other retirement vehicle can match,” stated Begonya Klumb, CEO of UMB Financial Corporation Healthcare Services, in a CNBC interview.

HSAs Great Opportunity for Elderly to Control Their Healthcare

Even if Republicans fail to revamp healthcare, HSA industry leaders are expected to continue to look for ways to expand into additional markets. According to a Kaiser Health News article, companies that manage HSA accounts are “eager to reach new markets, including baby boomers in Medicare and enrollees in the military’s Tricare system, for whom—under current law—HSAs are off-limits.”

Eric Remjeske, President and co-founder of Devenir, believes those over 65 would seize upon an opportunity to use an HSA account to help offset Medicare’s cost sharing expenses.

“That is a great population that has the potential to save and really take more control over their healthcare,” Remjeske told Kaiser Health News.

Industry officials are confident HSAs will continue their upward trajectory, attracting new customers and additional healthcare dollars.

“The political and economic winds are favorable and most definitely pushing HSAs,” Kevin Robertson, Senior Vice President and Chief Revenue Officer for HSA Bank, the industry’s third-largest company, told Kaiser Health News.

What’s good for the HSA industry also may prove to be good for medical laboratories. If more healthcare consumers turn to HSAs to pay their out-of-pocket medical costs, including clinical laboratory services, the fear that increased enrollment in high-deductible plans will cause a reduction in the utilization of clinical lab tests may prove to be unfounded.

—Andrea Downing Peck

Related Information:

Health Savings Account Assets Reach 42.7 Billion in June

2016 Year-End Devenir HSA Research Report

What Health Care Confusion Means for HSA’s Future

Health Savings Accounts Are the Big Winner as Republicans Hash Out an Obamacare Replacement

Companies Behind Health Savings Plans Could Bank on Big Profits Under GOP Plan

Hospitals, Pathology Groups, Clinical Labs Struggling to Collect Payments from Patients with High-Deductible Health Plans

Growth in High Deductible Health Plans Cause Savvy Clinical Labs and Pathology Groups to Collect Full Payment at Time of Service

Because of Expanded Numbers of Patients with High-deductible Health Plans, Patients Are Now Responsible for 30% of Hospital Revenues

Health Savings Accounts Change Collection Model for Doctors, Soon Pathologists

Why Some Consumers Love the Affordable Care Act Health Insurance Coverage and Some Consumers Hate It

Apr 24, 2017 | Compliance, Legal, and Malpractice, Laboratory Management and Operations, Laboratory News, Laboratory Operations, Laboratory Pathology, Laboratory Testing, Management & Operations

Pathologists and clinical laboratory managers need to understand the reasons why different consumers have entirely different financial experiences with the health insurance obtained under the ACA

One of the interesting consequences of the Affordable Care Act is that there are different classes of consumers who have completely different experiences with the health insurance coverage obtained through the ACA’s health insurance exchanges. It is important for pathologists as well as clinical laboratory managers to understand this fascinating outcome from the Affordable Care Act.

On one end of the spectrum are consumers who—because their income is at or just above the poverty line—get ACA health insurance coverage with full or nearly all of the premium subsidized be the federal government. They are the happiest with the law. That is, until they need to pay deductibles of as much as $5,000 per year for individuals and $10,000 per year for a family.

At the other end of the spectrum are the consumers with incomes at or above the 400% of the poverty level. Because these individuals get little or no federal premium subsidy, they are stuck paying the full price of their health insurance coverage. It is this group that is most unhappy with the ACA. And, not only are they paying hefty monthly premiums for coverage, they are also stuck with the $5,000 and $10,000 annual deductible requirements. (more…)

UnitedHealthcare Introduces ‘myEasyBook’ Online Shopping Service to Help Consumers Select Hospitals, Physicians, and Clinical Pathology Laboratories

Mar 14, 2014 | Instruments & Equipment, Laboratory Instruments & Laboratory Equipment, Laboratory Management and Operations, Laboratory News, Laboratory Operations, Laboratory Pathology

Targeted at employers and their employees, myEasyBook is designed to help consumers with high-deductible health plans save 30% or more when picking a provider

It is rare for a national health insurance company to use the 2014 International Consumer Electronics Show in Las Vegas to unveil a new online healthcare service, but that’s exactly what UnitedHealthcare Group (NYSE: UNH) did. On January 7, it took the wraps off its new myEasyBook healthcare shopping service.

Clinical laboratory managers and pathologists should take note of this development. It is one more example of how prominent healthcare companies want to help consumers shop for healthcare providers by providing information about quality and price in an easy-to-use format. Every medical laboratory should be thinking about when and how it wants to make its quality information and lab test pricing readily available to consumers. (more…)

Indiana’s Version of Consumer-Driven Healthcare Saves Money for Employees and the State

Mar 30, 2012 | Laboratory Pathology

Now in its fifth year, Indiana’s CDHP now covers 90% of eligible state employees

Many pathologists and clinical laboratory managers are carefully watching for evidence that new healthcare delivery models can deliver improved patient outcomes at a lower cost. Now comes evidence that a consumer-directed health plan (CDHP) for Indiana state employees—that incentivizes consumers to manage their healthcare dollars more carefully—is saving money for both employees and the state.

According to a story in the Centre Daily Times (CDT), state officials in Indiana claim that the state’s CDHP has reduced the state’s overall health benefit costs and met with high subscriber satisfaction.

Governor Mitch Daniels and other Indiana officials claim that, since introducing the CDHP in 2006, the Hoosier state’s overall health benefit costs are down by more than 10%, with only 2% of subscribers switching back to a traditional plan, the CDT reporter wrote.

(more…)

Survey Reveals that Consumer-Directed Health Plans (CDHPs) Confound Most Docs

Jun 17, 2009 | Laboratory News, Laboratory Pathology

Clinical laboratories can provide that missing education about CDHPs to patients

Even as enrollment in Consumer-Directed Health Plans (CDHPs) and Health Savings Accounts (HSAs) climbs steadily year after year, a new study reveals that most physicians are unprepared to help their patients understand and better use these forms of health insurance. This is a barrier to CDHP acceptance and an opportunity for clinical laboratories.

CDHPs—and their close cousins, HDHPs (high-deductible health plans_—are designed to shift more responsibility for healthcare decisions to patients. Many physicians, however, are unprepared to advise patients enrolled in CDHPs about cost-effective treatment options. This is the finding of a 2008 survey of 525 randomly selected doctors published in the American Journal of Managed Care . Nearly half, 43%, of doctors responding to the survey admitted knowing “a little” or “not at all” about CDHPs or HSAs. At least 33% of surveyed physicians said they are “somewhat” knowledgeable. Only 24% of physicians surveyed claimed “much” or “a great deal” of knowledge about CDHPs.