Health savings accounts are growing in popularity, with nearly one-third of employers in a recent survey saying they plan to offer HSAs next year.
A survey released Thursday by Mellon Financial Corp.'s Human Resources & Investor Solutions unit revealed that while only 7% of the 360 employer respondents now offer HSAs, 32% expect to add them in 2006.
The survey, "Health Reimbursement Arrangements/Health Savings Accounts: National Trends," was completed in the second quarter of this year. It studied employers with an average of 9,000 workers.
HSAs, authorized by the Medicare Prescription Drug, Improvement and Modernization Act of 2003, are portable health savings accounts that employees can use to pay for qualified medical expenses. HSAs are linked to high-deductible health insurance plans to cover catastrophic medical costs. Both employers and employees can make tax-free contributions to the accounts.
The survey found that an average of 16% of eligible employees are enrolled in HSAs among organizations responding to the study. Survey respondents said they are aiming at an enrollment goal of 24% of eligible employees.
While small employers and individuals are the main consumers of HSAs, Mellon expects in 2006 "an explosion of HSAs, with many more large employers adding them to their benefits package," said Brad Engel, national health and welfare product leader in HR&IS' Chicago office.
The survey also found that HSA growth will significantly exceed that of health reimbursement arrangements, another vehicle that can be linked to high-deductible plans.Sixteen percent of responding employers said they now offer HRAs, and 20% said they plan to add them next year.
In fact, among employers that have not yet implemented HRAs, just over half said they are likely to skip over them and instead adopt HSAs.
"Plan sponsors are going directly to health savings accounts because employees and other plan members view them positively, seeing them as their own money. It's hard for a book entry account to compete with real movable cash," Mr. Engel said, comparing HRAs to HSAs.
Free copies of the survey are available from Adabelle Cohen at 203-352-1684.
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