Every month, more than 100,000 new health savings accounts (HSAs) are opened. For cost-conscious consumers who are willing to research medical pricing and shop around, the potential to build equity in these accounts is great.
An HSA is a tax-advantaged account used to pay for qualified medical expenses. It is sometimes referred to anecdotally as a "medical 401(k)." The HSA is funded by pre-tax contributions from individuals or their employers. Money can be withdrawn tax-free from the HSA to pay for qualified medical expenses. Major expenses are paid by an insurance company through a major medical insurance policy. Any money left in the HSA rolls over from year to year and remains in the account to fund future medical expenses or act as a retirement nest egg. The balance in an HSA may be invested and earn interest to increase the available funds.
Your clients have no lack of options when deciding who their HSA custodian will be. However, many are left in the dark as to what to look for in an HSA.
Not all HSAs are alike
Many HSA products that were rushed to the market consist of nothing more than a specialized bank account. In addition to normal deposit and withdrawal functions, it is critical that an HSA has additional tools and support to help your client save their health care dollars and build equity in their HSA. In their 10th annual survey of large employers, Watson Wyatt and the National Business Group on Health reported: "While HSAs offer great promise ... employers also need to provide employees with information, tools, financial incentives, and lifestyle behavior programs."
A good HSA custodian or administrator will give its clients access to repricing, self-diagnosis, ask-a-nurse, and other tools to help patients manage their health care dollars. These additional services have been proven to make a difference in building equity in an HSA. A survey conducted by Bergen Networks in September 2005 compared clients of a custodian that provided these extra services against the rest of the industry. Fifty-four percent of those with custodians that provide good information reported their HSAs were growing compared with 37 percent in other HSA plans. This proves that educational client services are a necessary component to successfully building equity in an HSA.
Help your client choose an HSA custodian by recommending the features on this checklist.
For cost-conscious consumers who are willing to put forth a little effort and have found the proper HSA custodian, HSAs provide a way to build equity in health care. As this form of health coverage continues to grow, steer your clients toward the HSA providers that will give them the best value and information to help them reap the full benefits of their health savings account.
Stephen Neeleman, MD is a board certified physician and surgeon at American Fork Hospital in Utah. Dr. Neeleman is the CEO and a co-founder of HealthEquity, an HSA administrator dedicated to client services and consumer education. He serves on the Council for Affordable Health Insurance HSA Working Group and the National Health Care Reform Coalition and is co-author of "The Complete HSA Guidebook." For more information, contact him at 801-642-0500 or sneeleman@healthequity.com.
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