Before enrolling in a consumer-directed health plan (CDHP), people may want to take stock of their financial assets. Relatively few uninsured households have enough financial assets to cover the cost sharing in CDHPs that are tied to a health savings account (HSA), according to a recent study conducted by Kaiser Family Foundation researchers and published in Health Affairs. An HSA allows beneficiaries to pay for current health expenses and to save for future qualified medical and retiree health expenses on a tax-free basis.
While premiums for these plans are relatively low, families with low-to-moderate income levels don’t have the financial assets to cover the deductible should a member get sick. The new study examined the asset levels of households with two or more uninsured members in 2004 and compared it to the range of cost-?sharing features in HSA-qualified health plans.
Assets are an important consideration because these families may not have adequate income to pay the potentially high cost sharing under these policies and would have to dip into any savings they might have to pay their bills.
“Although lower premiums may increase the ability of the uninsured to buy some coverage, high out-of-pocket liability may leave families exposed to costs that they cannot meet,” write the authors, Kaiser researchers Paul Jacobs and Gary Claxton.
Kirk Pion, executive director of consumer initiatives at Health Care Services Corp., which operates the Blue Cross and Blue Shield plans in Illinois, New Mexico, Oklahoma, and Texas, says this problem can often be addressed during discussions about benefit design between the employer and insurer.
“Employers are funding part of the HSA account, so they can offset the member’s exposure and try to fund the HSA appropriately,” Pion says.
As a result, HSAs can have a rich preventive benefits package that includes annual physical examinations, immunizations, and mammograms, for example, that are covered 100 percent, Pion says.
“Medical directors and pharmacy directors can provide their clinical expertise to the Internal Revenue Service when it comes to what should and what shouldn’t be covered,” says Pion. “Insurers are having some difficulty trying to figure out the IRS’s guidelines about taxable benefits. The guidelines are vague. The government needs some clinical guidance about what constitutes preventive care,” Pion says.