Health Savings Accounts Bridge the Health Insurance Gap for Some
A new survey released by Mellon's* Human Resources & Investor Solutions (HR&IS) business reveals:
- Many more employers are planning to offer Health Savings Accounts (HSAs).
- Seven percent of survey respondents currently offer HSAs.
- 32% plan to add them next year.
- 66% of employers expect to contribute to the accounts.
- 16% of eligible employees are currently enrolled in an HSA. Survey respondents are targeting 24% as their enrollment goal.
Administrators of HSAs have amassed $460 million in deposits, according to a recent estimate by "Inside Consumer-Directed Care." HSAs, which were authorized by the Medicare Prescription Drug Improvement and Modernization Act of 2003, are portable health savings accounts consumers can use to pay for qualified medical expenses. These accounts can be offered in conjunction with a high-deduction health plan that also provides against catastrophic medical costs.
Both employers and employees can contribute to HSAs – up to $5,250 for a family and $2,650 for individuals in 2005. For employees, the pre-tax contributions will reduce their income taxes, while allowing them to set aside money for their health expenses. Employees accumulate tax-free interest on their HSA balances, and do not pay any taxes when using the money to pay for qualified medical expenses. Unused HSA balances can be carried forward from year-to-year, rolled over if the individual changes jobs, or even used for post-retirement health expenses.
Call the Henehan Company for a complete overview of this unique product.
*Mellon's survey, "Health Reimbursement Arrangements/Health Savings Accounts: National Trends" was completed in the second quarter of 2005. It studied more than 360 U.S. employers, averaging 9,000 employees per organization
