State Update: Health Savings Accounts

Published August 1, 2004


Chambers of Commerce Offer HSAs

ConnectiCare will soon be the first HMO plan in the country to offer a consumer-directed health plan compatible with Health Savings Accounts (HSAs). Approval by the HMO’s top management in June means Connecticut employers will be the first to enroll in the products, initially to be made available through 72 statewide Chambers of Commerce offices representing the Chamber Insurance Trust based in Orange, Connecticut. First HSA, Inc. of Reading, Pennsylvania will administer the Health Savings Account.

“The HSA is an exciting next step and viable solution to the rising costs of health care for business owners, while at the same time enabling them to continue to offer solid insurance coverage to their employees into the future,” explained Stephen B. Glick, administrator of the Chamber Insurance Trust.

According to Glick, small businesses have been anticipating the availability of the HSAs, and he expects to see strong enrollment in the next several months. Employers have been eager for this option, said Glick, as they seek to reduce their health insurance premiums while maintaining the positive benefits of a comprehensive managed care plan for their employees.


HSAs Are “Wave of the Future”

Governor Jeb Bush (R) signed legislation (HB 1629) on June 15 requiring Blue Cross and 11 other insurers that sell to small businesses to offer HSAs as an option. Bush and Lt. Governor Toni Jennings have launched a statewide road tour to extol the HSA option.

On July 1, BCBS of Florida began offering individuals the chance to buy a policy that comes with this type of savings account. Later, small businesses will be able to buy HSA policies for their employees.

Larry Handley, an insurance agent from Bradenton, Florida, noted that although the HSAs are not the cure for all health insurance access problems, they go a long way toward addressing the cost and the uninsured. Says Handley, “My agency is selling anywhere from five to 20 a week now.”

“This empowers consumers–patients, people–to make decisions for themselves, and in doing so I think that there will be a greater emphasis on prevention,” said Bush. “And if people are healthier, their costs and the cost to society will go down dramatically.”

Sam Miller of the Florida Insurance Council said, “The wave of the future is giving consumers the ability, as well as the financial incentive, to be more prudent.”


HSAs, Investment Accounts Merged

Blue Cross and Blue Shield of Illinois announced in a June 25 news release that it had entered into an agreement with the Human Resources & Investor Solutions sector of Mellon Financial Corporation to introduce an HSA health insurance plan.

The new product offers an interesting model for other companies to follow. The owner of an HSA is provided with an interest-bearing checking account and debit cards to pay for qualified medical expenses directly out of the HSA, as well as an investment account through The Dreyfus Corporation, a Mellon mutual fund business.

Blue Cross’ HSA will combine the insurer’s expertise in health care benefits with the financial strength of Mellon’s Human Resources & Investor Solutions business to provide consumers with a one-stop shopping experience.

Gail Boudreaux, president of BCBS of Illinois, was quoted in the news release as saying, “We believe this HSA product will provide employers and employees with more flexibility in developing and selecting benefit plans, which will help them manage costs. We consider HSA products to be an integral part of both our consumerism philosophy and our product portfolio.”


HSAs Workshop Planned for October

The Kansas business community is sending a clear message on health savings accounts, which are just now becoming widely available in the state. Cliff Somes of the Wichita Independent Business Association said, “There’s a lot of interest out there. I anticipate that as more products become available and more vendors are out there, we’ll hear a lot more about this.”

Somes said he will publish an article in the association’s upcoming newsletter to provide businesses with more information on HSA options. He also expects there will be seminars and informational meetings before fall, when businesses typically make decisions regarding insurance for the coming year. The Flint Hills Center for Public Policy, a Wichita, Kansas think tank, is planning an October 13 workshop to address consumer-driven health care and HSAs, said George Pearson, a spokesman for the group.

Small business owners, who have experienced first-hand the pressure rising health care costs place on their operations, have welcomed new consumer-driven options.

Toby Brown, a co-owner of Direct Mail Printers in Wichita, pays 100 percent of the health insurance costs for his employees. His son’s company, Adroit Corp., already has medical savings accounts (MSAs) in place for its employees. The restricted MSAs have evolved for the better into HSAs, in the younger Brown’s opinion. When Congress authorized HSAs last January, making them available to all people in the state, the younger Brown immediately switched to HSAs. “Our experience has been terrific,” he said. “Our (employee) premiums are down to around $80 a month.”


HSAs Circumvent Legal Obstacles

According to the state affairs director of the Council for Affordable Health Insurance (CAHI), J.P. Wieske, the Kentucky Office of Insurance issued an emergency regulation allowing HSAs to be sold in the state, effective June 1. The regulation modifies an earlier mandate that all health plans cover hospice care at least equal to Medicare benefits–a mandate HSAs are unable to meet because the high-deductible insurance accompanying an HSA does not offer coverage as extensive as Medicare.

“While Kentucky Office of Insurance Acting Executive Director Glenn Jennings’ bulletin will provide HSAs to all Kentuckians, we believe the most positive impact will be on the uninsured,” stated Wieske. “The most recent data continues to confirm the popularity of HSAs with the previously uninsured. By ensuring the availability of HSAs in Kentucky, Director Jennings has, with a stroke of a pen, helped the uninsured in his state.”

Kentucky policymakers have been working over the past several years to repair the damage done by their 1994 reforms to the state’s health insurance market. (See “Kentucky Governor Fletcher Seeks Insurance Reform,” Health Care News, May 2004.)


HSAs for State and Local Government Employees

Heading into the last day of the legislative session, Louisiana lawmakers voted April 9 to authorize state and local government entities to offer individual HSAs so employees can use pre-tax dollars to pay for health care expenses not covered by insurance. With little fanfare and less media attention, Louisiana became one of the first states to promote this form of consumer-directed health care for state employees.

New York

HSAs Will Spread Fast

HSAs may not be catching on yet with upstate New York employers, but according to a recent survey by Excellus BlueCross BlueShield, that could change dramatically in the near future.

Consumer-driven health plans are currently an option for about 1 percent of upstate workers with employer-sponsored health benefits. That number could grow to as much as 36 percent over the next two years, according to the Excellus survey, which polled benefit managers at 589 randomly selected public and private upstate companies.


Web Technology Marries Banking, HSAs

To support insurers’ initiatives in the HSA market, MyHealthBank, headquartered in Portland, Oregon, announced in late January that it has begun collaborating with HSA Bank to provide its customers with a highly integrated banking and technology offering for HSA accounts. MyHealthBank will integrate technology from HSA Bank for health savings account banking transactions with MyHealthBank’s Unify platform, a Web-based, self-service platform for broker quoting, member enrollment, and benefits administration.

“Currently, insurers are rushing to have HSA-based products in place to take advantage of the tremendous interest among employers,” said Steve Sterba, president and CEO of MyHealthBank. “Many of our customers are looking for ways to develop the infrastructure to support HSA-based plans without going to an outside bank partner.”

The brokerage capability from HSA Bank introduces additional self-service capabilities, allowing members access to all their health savings account details from one convenient place. Through MyHealthBank Unify, consumers can access their brokerage account at any time to place trades, get stock quotes, retrieve news and economic reports, track the investment portfolio for their HSA, research securities, and chart stock histories.


Associated Financial Group Offers HSAs

Although Governor Jim Doyle (D) vetoed legislation on May 27 that would have provided Wisconsin residents a state income-tax break on HSA premiums (see related story, page 1), Green Bay’s Associated Financial Group is moving ahead with an HSA option for the employers it serves.

Employees whose employer offers the Engage Health Savings Account Solution can use a VISA debit card, ATM, or personal checks to disburse their HSA funds. Charges from doctors’ office visits are handled the same way they would be handled through a traditional insurance plan: The doctor submits the charges to the insurance carrier, which pays the bills … from the participant’s HSA.

Bill Bohn, CEO of Associated Financial Group, said, “The HSA is an extremely attractive alternative because it gives consumers the power to control their health care spending as they see fit.”

The plan is currently available in Wisconsin, Minnesota, and Illinois.

Conrad F. Meier is managing editor of Health Care News. His email address is [email protected].