By Jerry Geisel, Crain News Service
WASHINGTON (July 14, 2014) — Fueled by growth in the large-employer market, enrollment in health savings accounts (HSAs) linked to high-deductible health plans (HDHPs) increased almost 12 percent to nearly 17.4 million this year, according to an annual survey released July 9.
In the large-employer market—defined in the survey by Washington-based trade group America's Health Insurance Plans (AHIP) as employers with at least 51 employees—12.8 million people were enrolled in HSA-linked plans at the start of 2014, a one-third increase over 2013.
Enrollment in the small-group and individual markets was flat. However, AHIP believes the “census understates the number of individual purchasers choosing HDHP plans with health savings accounts because some market-specific data is unavailable for certain states,” the survey said.
In the case of the small-group market, reported enrollment was slightly more than 2.5 million, down from just less than 2.6 million in 2013. Reported enrollment in the individual market was 1.97 million this year, down from 2.03 million in 2013.
“HSA plans are increasingly becoming an important and valuable coverage option for consumers and employers,” AHIP President and CEO Karen Ignagni said in a statement. “HSA plans provide important tools to support individuals and families in their healthcare decisions and to help them save for future medical expenses.”
HSAs, authorized under a 2003 law that added a prescription drug benefit to the Medicare program, became available on Jan. 1, 2004. Enrollment has risen steadily since then.
According to AHIP, 1 million people were enrolled in HSAs in 2005; 3.2 million in 2006; 4.5 million in 2007; 6.1 million in 2008; 8 million in 2009; 10 million in 2010; 11.4 million in 2011; 13.5 million in 2012; 15.5 million in 2013; and 17.4 million in 2014.
States with the highest percentage of HSA enrollees younger than 65 with private health insurance at the start of this year were Minnesota at 17.6 percent, Illinois at 14 percent and Washington at 13.8 percent. States with the lowest percentage of enrollees at the start of this year were Hawaii at 0.3 percent, Alabama at 1.7 percent and Mississippi at 2.1 percent.
Lower premiums drive growth
The key factor driving HSA growth is that premiums for HDHPs, which the law requires be linked to HSAs, tend to be much lower than for more traditional health plans, according to numerous surveys.
For example, a survey by Mercer L.L.C. found that the cost of medical coverage through a consumer-driven health plan linked to an HSA averaged $8,482 per employee in 2013. That's about 17 percent less than the average of $10,196 per employee for medical coverage through a preferred provider organization.
This year, the minimum deductible for single coverage through an HSA-linked health plan is $1,250. The minimum deductible for family coverage is $2,500.
This report appeared on the website of Business Insurance magazine, a Chicago-based sister publication of Tire Business.