Consumer-Driven Health Plans Gain Ground

Thirteen percent of the privately insured U.S. population was enrolled in a consumer-driven health plan (CDHP) in 2015, according to a report by the Employee Benefits Research Institute. Sixty-three percent of those enrolled in CDHPs had an HSA; 13% had an HRA, and 24% had the option of an HSA-eligible health plan, but had not opened an HSA.

Manufacturing Leads Adoption of High-Deductible Health Plans

Manufacturing

A survey by Benefitfocus reveals distinct differences in benefit offerings among manufacturing, education, and health care industries. Manufacturing leads the adoption of high-deductible health plans (HDHPs), education favors traditional plans (PPOs, HMOs, etc.) and the health care industry offers the most voluntary benefits. Manufacturing is the only industry of the three, in which more companies offer a combination of HDHPs with traditional plans than traditional plans only (48% to 46%). Manufacturing employees selected an HDHP over a traditional plan 46% of the time. The findings suggest that manufacturing employers have an opportunity to encourage employees to participate in health savings accounts (HSAs) or flexible spending accounts (FSAs) to cover higher out-of-pocket costs associated with HDHPs. Only 23% of education employers offer at least one HDHP. Traditional health plans dominate the mix of benefits. HMOs made up 44% of employee enrollments, which suggests an opportunity to offer a wider range of lower cost benefit options for a multi-generational workforce.

Employees in the health care industry face high deductibles regardless of plan selection, but are better equipped to cover unexpected medical costs with voluntary benefits (including critical illness, accident, and hospital-indemnity insurance). Health care employers offered gap products at the highest rate of the three industries at 12 percentage points above the average. Nearly half of health care workers selected a voluntary plan when given the choice.

HSAs can offer serious tax benefits

The tax advantages of health savings accounts can trump those of individual retirement accounts or 401(k)s without matching because those who make an HSA withdrawal to pay qualified medical expenses can avoid income tax on the withdrawal as well as the initial contribution. At age 65, HSA holders can withdraw without penalty to cover other expenses, as well, although those withdrawals are taxed. There’s also no minimum distribution at age 70-1/2 as with 401(k) plans and deductible IRAs. CBS MoneyWatch (3/24)

HSAs top employers’ lists of tax-exempt benefits

Employers responding to a recent survey said offering a consumer-directed health plan is the best way to control health care costs, and employees benefit because contributions to CDHP-linked health savings accounts are tax-deductible, as is interest accrued in the accounts. Other popular tax-deductible benefits include education assistance, commuting benefits and achievement awards. Entrepreneur online (2/24)

HSAs and HRAs

In 2014, there was $22.1 billion in health savings accounts (HSAs) and health reimbursement arrangements(HRAs), spread across 10.6 million accounts, according to data from the
2014 EBRI/Greenwald & Associates. In 2008, there were only 4.2 million accounts with
$5.7 billion in assets. The average account balance was $2,077 in 2014, up from $1,356 in 2008.
An increasing number of people have held their account for three or more years. Twenty-seven percent had held their account for three to four years, up from 19% in 2008. Thirteen percent had held their account five or more years, up from 4% in 2008. Accounts with an employer contribution had an average balance of $2,403 while those without an employer contribution had an average balance of $2,056.

People who had held an HRA or HSA for five years or more had $3,092 in their account. Those who had held an account for less than a year had less than $1,500 in their account. In general, average account balances have grown over the longer term regardless of how long the account had been open. The report also found the following:

• Average rollover amounts increased from $1,165 in 2013 to $1,244 in 2014.
• $8.9 billion was rolled over in 2014, down from $9.4 billion in 2013.
• 11% of people had held an account for more than a year without a rollover in 2014.
• Rollover amounts increased with the length of time an individual had held an account. In 2014, those who had held an account one to two years rolled over an average of $982; those who had held an account three to four years rolled over an average of $1,421; and those who had held an account five or more years rolled over an average of $1,428.
• Accounts with an employer contribution had a higher amount rolled over than those without an employer contribution.
• Accounts with an employer contribution had an average rollover of $1,280 while those without an employer contribution had an average rollover of $1,069.

How HSAs Could Beat 401(k)s For Savings

For some employees, using an HSA for health care expenses in retirement may be better than saving in a 401(k) plan, according to a report by the Employee Benefit Research Institute (EBRI). Contributions to an HSA reduce taxable income; earnings on the assets in the HSA build up tax free; and distributions from the HSA for qualified expenses are not subject to taxation. “Depending on the rate of return in an HSA, these accounts could generate significant assets,” said Paul Fronstin of EBRI. If you contribute the maximum allowable amounts for 40 years to an HSA without making withdrawals, you could accumulate up to $360,000 if the rate of return is 2.5%, $600,000 if the rate of return is 5%, and nearly $1.1 million if the rate of return is 7.5%. However, he added that many people aren’t able to save in an HSA and pay their out-of-pocket health care expenses. Also, HSA balances may not be enough to pay all medical expenses in retirement even if maximum contributions are made for 40 years. For more information, visitwww.ebri.org.

HSAs Provide Financial Flexibility

Fifty-two percent of HSA account holders spent more than 80% of their HSA funds for health care expenses during 2012, according to a survey by America’s Health Insurance Plans (AHIP) and the American Bankers Assn. Since Congress authorized HSA plans in 2004, AHIP has conducted three surveys on HSA banking activity. This latest report measuring the financial activity of more than 1.4 million HSAs, shows consumers taking an active role in managing their health care dollars. Fifty-five percent of HSAs received personal contributions during 2012. While end of the year account balances varied, roughly 80% of accounts had a positive balance that could be carried over to the next year to help pay for future expenses. Fifty-eight percent of accounts had withdrawals during the year. Of those accounts, the average withdrawal during 2012 was $2,081. For more information, visit http://www.hsaalliance.org.

Expert predicts combined retirement, health accounts are coming

Retirement products that offer combined retirement and health payroll savings plan deductions are on the way. “That is the frontier for the next two or three years,” says Fidelity Investments Retirement Policy Development chief Doug Fisher. Such accounts will help workers reach higher levels of retirement security, he adds. Financial Advisor online (5/15)

Americans Don’t Understand HSAs

With the advent of Obamacare, more Americans are eligible for a health-savings account (HSA), but most don’t have the information they need to take advantage of them, according to a survey by insuranceQuotes.com. In fact, 86% say they don’t understand HSAs. Fifty percent of Americans say they are somewhat or very likely to use an HSA to cut their taxes. But only 8% have an HSA.

Many Americans are confused about eligibility and benefits. For example, only 14% know that an HSA has to be paired with a high-deductible health insurance plan. Many Americans are confused about which medical expenses HSAs can be used for; 52% think they can use HSAs to pay for over-the-counter medications, and 51% think they can use HSAs to pay health insurance premiums, both of which are untrue. Popular expenses that HSAs can be used for include prescription medications, doctor visits, dentist visits and eyeglasses.

People who buy coverage on the public health insurance exchanges are especially good candidates for HSAs, since most of the purchased plans under Obamacare are high-deductible plans including Silver and Bronze plans.  For more information, visit http://www.insurancequotes.com/health/HSA-and-high-deductible-health-plans.

Employers Are Planning for ACA Changes

Ninety percent of employers are developing tactics and taking steps to deal with the Affordable Care Act (ACA). Many are planning to modify their plans due to the ACA. Sixty-nine of employers say they will definitely continue providing employer-sponsored health care when health exchanges come online in 2014 compared to 46% who said they would in 2012, according to a survey by the International Foundation of Employee Benefit Plans. Twenty-five percent say they are very likely to continue their employer-sponsored health care offering.

In response the ACA, 18% of employers have already increased participants’ share of plan premiums and 25% plan to do so over the next year. Twenty-five percent of employers that are planning to make changes are increasing their emphasis on high-deductible health plans (HDHPs) with health savings accounts (HSAs) while an additional 14% are assessing the feasibility of adding doing so.

Employers are also encouraging healthy behavior in employees, with 19% developing or expanding organized wellness programs within the past year. Additionally, 14% of employers adopted or expanded the use of financial incentives to encourage healthier lifestyles within the past year, with another 25% planning to do so in the next year.

Julie Stich, research director for the International Foundation of Employee Benefit Plans said, “More and more organizations are losing their grandfathered status, dropping from 45% in 2011 to 27% in 2013. Also many organizations are redesigning their plans to avoid the 2018 excise tax on high-cost or so called ‘Cadillac plans.’ In 2011, only one in 10 said they were redesigning their plan to avoid the additional tax, but we’ve seen a steady increase over the past two years that shows the number will soon double.” For more information, visit www.ifebp.org/ACA2013.

Last Updated 10/20/2021

Arch Apple Financial Services | Individual & Family Health Plans, Affordable Care California, Group Medical Insurance, California Health Insurance Exchange Marketplace, Medicare Supplements, HMO & PPO Health Care Plans, Long Term Care & Disability Insurance, Life Insurance, Dental Insurance, Vision Insurance, Employee Benefits, Affordable Care Act Assistance, Health Benefits Exchange, Buy Health Insurance, Health Care Reform Plans, Insurance Agency, Westminster, Costa Mesa, Huntington Beach, Fountain Valley, Irvine, Santa Ana, Tustin, Aliso Viejo, Laguna Hills, Laguna Beach, Laguna Woods, Long Beach, Orange, Tustin Foothills, Seal Beach, Anaheim, Newport Beach, Yorba Linda, Placentia, Brea, La Habra, Orange County CA

12312 Pentagon Street - Garden Grove, CA 92841-3327 - Tel: 714.638.0853 - 800.731.2590
Email:
Jay@ArchApple.com
Copyright @ 2015 - Website Design and Search Engine Optimization by Blitz Mogul