As millions of working Americans open their employers health care packets this month, many will be encountering a new option: high-deductible plans linked to health savings accounts that come loaded with tax benefits.
Theyre attracting workers who want lower premiums and a tax-free way to save for retirement. But theyre not for everyone, which is why some consumer groups are alarmed by their growing presence in the health care market.
In the last six years, the number of workers covered by these health savings account plans has quadrupled, from 5percent in 2007 to 20percent this year, according to a 2013 Kaiser Family Foundation survey.
More companies are offering them as a choice, and in some cases, theyre the only choice, said Paul Fronstin, director of health research and education for the Employee Benefit Research Institute in Washington, D.C.
Experts say the reason is simple: Employers are trying to cut expenses after years of inflating health care costs that only recently started to ease. And some are motivated by a looming Cadillac tax under the federal Affordable Care Act, which in 2018 will start penalizing companies offering health plans that are considered too generous.
In return for lower premiums, consumers who sign up for these plans agree to pay much more out of their own pockets before their insurance coverage kicks in. In 2014, the mimimum deductible for a qualifying HSA plan is $1,250 for an individual, and $2,500 for a family. Maximum out-of-pocket costs are $6,350 for a single person and $12,700 for a family.
Other than high deductibles, the most notable feature of the new plans are the so-called health savings accounts, or HSAs, which were authorized by Congress in 2003 as part of a massive Medicare overhaul. Similar to a 401(k), the HSA is a take-it-with-you, tax-free savings account thats used to cover your out-of-pocket medical expenses. To make HSAs especially appealing, the plans offer multiple tax advantages for contributions and withdrawals. The money can even be rolled over for retirement.
Theres clearly an incentive on the part of employers to offer these, said Maribeth Shannon, program director with the California Healthcare Foundation. Some of its financial. Some of its philosophical. There are a lot of employers who feel employees should have a little skin in the game, a little more responsibility for the health care costs they consume.
Its part of sweeping trend toward consumer-driven health care, an approach that government and employers are embracing as a way to tamp down health care costs by encouraging individuals to be more in control of their health care behaviors and choices.
Some companies, for instance, are instituting new wellness programs with beefed-up rewards or even penalties based on whether employees do or dont quit smoking, lose weight or lower their cholesterol. Kaiser Permanente recently announced a wellness program that will pay its workers up to $500 apiece if a majority of employees meet certain health goals. Others, like grocery chain Kroger, pay only a set amount for certain drugs or procedures, encouraging employees to shop around for the best price.
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Employers push health care savings accounts; consumer groups wary