However, making these accounts available will require significant health plan design changes for many organizations. While 61% of employers are likely to offer HSAs, only one-third of all companies have the required design structure in place to do so.
“The law allows HSAs as part of a high-deductible health plan, which few companies currently offer,” said Allen Steinberg, Hewitt retiree health care consultant, in a statement. “Companies interested in adding HSAs must offer a consumer-driven health care option for their employees, which represents a significant shift in thinking and strategy for many employers and a major change in the way employees would use their health benefits.”
Also, because of those changes, 67% of companies plan on educating their employees on HSAs and how to use them.
“HSAs are attractive to employees because of their unique tax benefits,” added Steinberg. “Funds go into the account tax-free, earnings grow tax-free and, as long as the money is used for health care-related expenses, the money comes out tax-free.”
Employers’ final decisions on offering HSAs, however, will hinge in large measure on further government regulations to be released in June. These will likely address key outstanding issues, such as the interaction between HSAs and other arrangements that employers may offer, including flexible spending accounts (FSAs) and health care reimbursement arrangements (HRAs), as well as the ability of employers to make matching contributions to HSAs.
Effective this year, the Medicare law creates tax-free HSAs for individuals covered by a high-deductible health plan (with at least a $1,000 annual deductible per individual or a $2,000 annual deductible per family). Individuals (or their employers) can fund these accounts on a pre-tax basis and accumulate nontaxable earnings. Those who have HSAs can roll over unused funds every year and use the money to pay for qualified medical expenses during their working career or retirement on a tax-free basis.
Hewitt surveyed nearly 270 companies on the HSA provisions of the Medicare Modernization Act of 2003.