Last month, Blue Cross and Blue Shield Association (BCBSA) announced plans to expand its offerings of health savings account (HSA)-compatible products nationwide by 2006.
“HSAs are the latest in a continually expanding portfolio of consumer-directed healthcare products that Blue Cross and Blue Shield companies are developing to empower their members to make informed healthcare decisions,” said Scott Serota, president and CEO of BCBSA. “HSAs offer added choice and flexibility to consumers and businesses as they select insurance that best fits their needs.”
Blue Cross and Blue Shield companies are currently offering HSA-compatible products in 34 states, with plans to reach 48 states by 2006. According to the BCBSA Web site, Blue Cross and Blue Shield of Mississippi is scheduled to roll out offerings in the individual and group markets in 2005.
“We don’t have much information at this time,” said Blue Cross and Blue Shield of Mississippi spokesperson John Sewell. “We’ll have more to tell after the first of the year.”
John Maginnis, vice president of marketing for Blue Cross and Blue Shield of Louisiana, reported that by the end of September, more than 53,000 individuals were enrolled in the plan’s HSA product, BlueSaver.
HSAs were established last year as part of the Medicare Modernization Act, effective January 1, 2004, to allow the nation’s 250 million non-elderly Americans to save money tax-free and apply withdrawals to health expenses in a program more far-reaching than the Archer MSAs that were enacted in 1996.
HSA accounts require the purchase of a high-deductible health insurance plan — a minimum of $1,000 for an individual and $2,000 for a family — and money in the accounts may be used to pay for health expenses subject to the deductible. Annual contributions to the HSA are limited to 100% of the deductible up to a maximum of $2,600 for an individual or $5,150 for a family. Account holders over the age of 55 may contribute another $500 by December 31, increasing by $100 annually until it reaches $1,000 in 2009. Employers and/or employees may make the contribution.
“HSAs are taking off more quickly than HMOs,” said Claire Sheahan, spokesperson for BCBSA. “We’re seeing a real pick-up all over.”
Ron Aldridge, state director of the National Federation of Independent Businesses, the nation’s largest small-business advocacy group representing 600,000 members, said HSAs offer small business owners “a tremendous opportunity to afford health insurance again.”
“The cost of health insurance policies are reduced up to 60% in some cases based simply on the amount of the deductible,” he said. “With HSAs, parents can now take their children to get glasses or braces, expenses that represented continuous out-of-pocket money that had no tax advantage. What needs to happen now in Mississippi: the state needs to add a tax deduction for the HSA similar to what the federal IRS tax code has already done.”
HSAs represent an affordable option for employees to pick up part of the tab and also allow laid-off workers to have available funds to purchase insurance for the time they’re out of work.
“Setting up that savings account is a fairly expensive proposition, but once you get it funded and get it going, you’re able to loosen up some monies for employees,” he said.
Even though none of Ken Barlow’s clients at The DelKen Group, a human resources services firm in Ridgeland, have HSAs, they are growing in popularity, he said.
“With few exceptions, a lot of healthcare accounts aren’t automatically absorbed if not completely used,” he pointed out. “You can either roll it over or get a refund. Taxes are paid on a lesser amount per pay period, and the program disciplines employees to have money ready to pay for deductibles and various medical costs during the plan year. Also, if employers don’t have any other benefits for employees, at least with HSAs they can offer the tax advantage.”
Contact MBJ contributing writer Lynne W. Jeter at email@example.com.
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