Remove Limits on HSA Participation
Ralph Bernstein, senior vice president of U.S. Bank Healthcare Payment Solutions and an industry leader for more than 20 years, says that the effect of health care reform can be enhanced with one unconventional move—separate HSAs from HDHPs.
Ralph Bernstein, senior vice president of U.S. Bank Healthcare Payment Solutions and an industry leader for more than 20 years, says that the effect of health care reform can be enhanced with one unconventional move—separate HSAs from HDHPs.
CDHC: In our recent Annual Outlook issue, you suggested that it’s time to separate health savings accounts (HSA) from high-deductible health plans (HDHP). Why do you think it’s so important?
RB: Now that there is a requirement for health insurance— much as we see in the auto industry—employers and consumers are going to be rethinking their coverage options. What’s best? What’s most affordable? How do you bridge the gap between what you have and what you need? By limiting HSA participation, you deny consumers essential choices.
CDHC: So you see having “open” HSAs as a critical component of quality care?
RB: Yes. All consumers are shouldering more of the financial burden of their care. Why deny them this cost-containment and management tool? HSAs can give them additional health care dollars that they can use now or put away for retirement, when most see a significant uptick in their health care expenses. Having financial resources means that people can make better choices about what they need to stay healthy—physically and financially. Healthier consumers reduce the strain on the overall health care system and lower costs for everyone.
CDHC: Some aspects of the new law won’t take effect for several years. Why press for decoupling now?
RB: In that run-up to health care exchanges and other provisions of the new law, employers and consumers may see an increase in premiums. Having access to an HSA will allow consumers to offset these costs. It will also help employers—particularly small-business owners—provide affordable coverage. That could mean the difference between hiring…or downsizing.
CDHC: How do you think the requirement for employers to offer health care coverage would affect the adoption of independent HSAs?
RB: The new reality will be that employers with 51 or more employees will be required to offer coverage or pay a penalty of $2,000 for every uninsured employee (minus 30). What if the employer looks at this situation and says to his staff, “I’ll make a lump-sum payment to you this year for your health care. You can buy whatever policy you want and take advantage of the benefits as you see fit.” The employer has now met the obligation, controlled his costs, avoided penalty fees, and given employees wholesale control of their care. With the support of good educational resources, employees are likely to shop for coverage that truly meets their needs and offers the best value. An independent HSA, not shackled to one specific type of health insurance, makes absolute sense in that scenario.
CDHC: What’s the argument for young employees who say, “I’m healthy. I’ll be fine with minimum coverage.”
RB: We need to start talking about HSAs the same way we do 401(k)s—the earlier you start, the more you’ll have, and the greater your financial security will be. It’s a responsible way of thinking. Health care is the single-largest expense in retirement. Current estimates place the cost of prescriptions, co-pays, deductibles, and Medicare premiums during that post- employment period at $250,000. That’s an increase of 56% over 2002—and a conservative estimate. Through HSAs, consumers will be able to protect more of their retirement dollars, enjoy greater peace of mind, and contribute to the financial well being of the country.
So the bottom line is this: We need to start thinking about care and coverage in new ways. By giving consumers more options—such as independent HSAs—and better information, they will be fully prepared to make choices that are right for them.
Ralph Bernstein has more than 20 years of experience in financial services and health care, including payments, credit and debit, and international banking. His expertise encompasses card issuing, product development and management, sales, operations, and finance. Ralph can be reached at 612-973-2120 or ralph.bernstein[at]usbank.com.
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