A health savings account (HSA) helps individuals save for future medical and retiree health expenses on a tax-free basis. Contributions to the account can be made by the employee, the employer, or both. Created by the government in 2003, use of the accounts has dramatically increased since then. According to data provided to Inside Consumer-Directed Care (ICDC), more than 60 financial firms have opened over 1.17 million HSAs and manage about $1.5 billion in assets — up more than 50% since the beginning of the year.
“Over the past four years, just about every major health insurer has launched some type of account-based consumer-directed health coverage. Over the next couple of years, we'll see every major financial firm add an HSA to their product portfolio,” says ICDC managing editor Steve Davis.
Anyone who has a high-deductible health plan (at least $1,050 annually for single coverage, and $2,100 for couples and families in 2006) can open an HSA. They are similar to 401(k) retirement plans in their portability.
HSA administrators and custodians say they are collectively opening about 50,000 new accounts each month. And ICDC data show that the average HSA balance grew from $1,181 in January to the current average of $1,260. The higher average balance illustrates that account holders are more likely to use HSAs as savings vehicles than as spending accounts, administrators say.
Inside Consumer-Directed Care is a biweekly subscription newsletter published by Atlantic Information Services (AIS) in Washington, D.C. AIS provides specialized business information for health care managers and advisors. Visit www.aishealth.com.