Health savings accounts grow in popularity

As the average family health insurance premium has increased by 58 percent since 2006, the growing trend in health insurance has been consumer-driven health plans with health savings accounts, said Suzie Hurley, vice president of group benefits at SilverStone Group.

A health savings account (HSA) is a savings account used in conjunction with a high-deductible health insurance policy that allows users to save money tax-free against medical expenses.

“It’s a powerful tool and there’s really nothing else like it out there,” said Dan LaRock, principal at SilverStone Group, which is headquartered in Omaha, Neb., and has a location in Sioux Falls, S.D. LaRock and Hurley discussed HSAs during the SilverStone Group Strategy Series Sept. 29 in Fargo.

HSAs can only be set up in combination with a qualified highdeductible health plan, with a minimum deductible of $1,300 for an individual and $2,600 for a family. “Though the deductible is higher, typically the employee’s monthly premium is lower,” Hurley said. “Generally, the employer helps fund the HSA to help the employee pay for their health care.”

While there is a yearly limit on the amount of money that can be put into the HSA — in 2016, the limit is $3,350 for an individual and $6,750 for a family — there is no limit on the account’s accumulation, Hurley said. “Unspent balances remain in the account until spent. There are no rules about if you don’t use it, you lose it. If the employee leaves your company, that money goes with them because it is a regular bank account.”

The high-deductible health plan cannot have office visit or prescription copays and typically includes all preventive services, Hurley said. The whole family also must meet the entire deductible or out-of-pocket maximum before any member of the family will have benefits paid out.

About 150 million Americans are covered by group health plans, and within that, there are 18.2 million active HSA accounts, LaRock said. National HSA assets grew $7 billion in the past year to exceed $34 billion.

“Health plans remain the largest driver of growth,” LaRock said. “More people are being introduced to this concept because of health plans. About 150 million get their insurance from their employer. Thirty-seven percent of new accounts come from health plans. The average investment account holder has a $15,092 total balance. That’s buying power. They don’t want to spend that, and they’re going to do everything they can to not have to spend it.”

The current estimate from Devenir, a leading independent investment adviser and consultant in the HSA industry, is that by the end of 2018, the HSA market will approach $50 billion in assets covering more than 27 million accounts, LaRock said.

Hurley said that half of SilverStone’s more than 700 clients have a consumer driven health plan with an HSA. “The lowest possible cost tier for employers and employees is a savings plan,” she said.

KAYLA PRASEK Staff Writer, Prairie Business 701.780.1187 kprasek@prairiebusinessmagazine.com