Employer HSA Interest Set to Skyrocket

While only 7% of survey respondents offer HSAs now, 32% plan to add them next year, according to the survey by Mellon’s Human Resources & Investor Solutions (HR&IS).

According to a Mellon news release, the vast majority of employers planning to first offer HSAs in 2006 are adding the accounts as an option for employees, with only 2% planning a 2006 implementation as a total replacement. The survey revealed that 66% of employers expect to contribute to the accounts. On average, 16% of eligible employees are already enrolled in an HSA with employers hoping to ultimately achieve a 24% enrollment goal.

“Small employers and individual consumers are leading the HSA charge this year,” Brad Engel, national health and welfare product leader with HR&IS, said in the news release. “But 2006 will see an explosion of HSAs, with many more large employers adding them to their benefits package.”

Meanwhile, 16% of respondents currently offer Health Reimbursement Arrangements (HRAs), and 20% plan to add them in 2006. Current average enrollment in HRAs stands at 28% of eligible employees with companies setting a 36% average goal, Mellon said. Of employers that have not yet implemented HRAs, 53% are likely to skip over HRA-style plans and instead adopt HSAs, according to the survey.

Some 66% believe these types of consumer directed programs can be designed and communicated to help promote informed consumerism and decision-making behavior, Mellon said.

The survey was completed in the second quarter of 2005 and covered more than 360 US employers, averaging 9,000 employees per organization. The study is available by calling Adabelle Cohen at (203) 352-1684.