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Health Savings Accounts Positioning
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HSA positioning In sports, positioning can be as critical as talent and desire. A five foot ten guard can get a rebound instead a seven foot center if the center is way out of position. Newly introduced Health Savings Accounts (HSAs) now must jockey for position in the months ahead to determine their ultimate impact in the marketplace. Assurant (Fortis Health), GoldenRule (United Health Group) Aetna and TexasPlans have already emerged as players in the HSA market, but many plans, benefit consultants and employers are waiting for additional forthcoming IRS guidelines as well as to see how the marketplace is reacting to early adopters. As with other components of consumer driven health plans, a major challenge is elevate consumer awareness and understanding of HSAs. A just released Destiny Health sponsored survey of 1,000 Americans revealed " that while 66 percent of respondents were interested in having their own tax-free health savings account, barely half that number were at all familiar with the legislation itself. The numbers were even more dramatic among young people, aged 18-24. Within this group, 72 percent were interested in the idea, but only 18 percent knew any of the details." A primary federal policy tool to influence delivery of health benefits outside of direct legislation has been wielded through the government's role as a purchaser- such as through the Medicare Advantage or Federal Employee Health Benefit Programs. In this regard, there are current proposals to add Consumer Driven Health Plans containing HSAs for the next open enrollment season. There are of course certain interest groups lining up to oppose or support the proposal. At the end of December, shortly after HSAs were enacted in the adoption of the Medicare Prescription Drug, Improvement and Modernization Act, the IRS issued Notice 2004-2, its first Official "Guidance" clarifying HSAs. One or more more substantial IRS Guidances on HSAs will be forthcoming in the next few months. John Hickman of Alston & Bird, in a recent Employee Benefit News article notes "As with any new legislation, the Medicare act leaves a few loose ends that require further regulatory clarification. For example, it is not clear what restrictions will be placed on mid-year changes to salary reduction elections for HSAs that are part of a cafeteria plan. In addition, the legislation does not state whether employer-funded HSAs will be subject to the substantiation requirements currently applied to health FSAs. The IRS has indicated that it will provide guidance on HSAs very soon. Additional guidance from the Labor Department is necessary to determine ERISA coverage and related issues." The American Benefits Council issued this statement to the IRS this week regarding Notice 2004-2, in hopes of influencing further IRS HSA rulings: "We offer comments that reflect top priority concerns requiring immediate resolution through guidance. These are: Coordination of HSAs with Flexible Spending Arrangements (FSAs) and Health Reimbursement Arrangements (HRAs); Discretion to allow employers to define preventive care, to offer certain benefits such as prescription drug coverage without a deductible, and to offer an HDHP as an option under an existing medical plan; and Clarification regarding application of nondiscrimination rules." In particular, the Council emphasized the
need to allow side by side coordination of HSAs with HRAs and FSAs with a
given employer: "Many employers have expressed the desire to offer
HSAs in addition to their current array of benefits rather than as a
partial or whole replacement of health benefits or other medical
reimbursement arrangements. Many of theseemployers maintain health FSAs
and/or HRAs in which a significant number of employees currently
participate. Allowing an individual to participate in an FSA and/or HRA
and enroll in an HSA, if structured appropriately, could significantly
increase participation in HSAs and sponsorship by employers. If HSA
participation rates are low, providing an HSA option will not make
economic sense for employers and employers are likely to continue to offer Two detailed on-line faculty presentations and an audioconference on HSAs are included in the upcoming Defined Care Web Summit in March. To get details, go to http://www.healthwebsummit.com/definedcare.htm For More Information: American Benefits Council Comments on IRS
HSA Guidance Galen Institute Responds to Recent
Criticisms of Health Savings Accounts Health Savings Account Interest Booming in
Individual Market, but Talk Still Outpaces Sales Health Savings Accounts: Interest High,
Knowledge Low Employee Benefits Law; IRS Issues Guidance
in Health Savings Account IRS Notice 2004-2: Guidance on Health
Savings Accounts. Health Savings Account Info Center |
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