Healthcare Today Medicare and Insurance

A Million Little Health Savings Accounts

February 1, 2006—The various insurance offerings by UnitedHealth Group can be found in a bulky catalogue, listed in the type of alphabet soup that has become the standard lingo for managed care. The preferred provider organization, or PPO, remains UnitedHealth's biggest seller.

But the latest add on to insurance plans, known as health savings accounts—or HSAs for short—are quickly gaining ground. These accounts act as a type of stow-away plan, allowing people to save up money, tax-free, should they ever get socked with a big medical expense down the road.

Daryl Richard, a spokesperson for UnitedHealth, says that more than 650,000 customers have signed up for the accounts since the insurance giant began offering them at the start of last year.

"This is a rapid area of growth for us," Richard says.

While experts continue to debate the merits of such an approach, health savings accounts are clearly the insurance initiative of the moment, solidifying a trend to have consumers increasingly share the burden of rising medical costs. The number of Americans who enrolled in these accounts has tripled since just this past March, according to a recent survey by the American Health Insurance Plans, a trade group that favors the shift.

Powerful Supporters
Among the biggest champions for health savings accounts is President George Bush, who has made them a focal point in his effort to clamp down on runaway medical expenses. In his State of the Union address, Bush singled out the accounts as a way to make American health care more competitive.

"We will strengthen health savings accounts," Bush said, proposing that Congress enact a series of additional tax breaks for those who purchase the policies.

Initial surveys show that the majority still prefer traditional insurance plans, which provide more comprehensive coverage. But the accounts are attracting a number of trend-setting baby boomers, who are betting that their continued good health can last through old age.

"Those who are healthy and wealthier are more willing to try them," says Paul Fronstin of the Employee Benefit Research Institute, a non-partisan organization that polled early adopters of these plans.

The appeal is understandable. This insurance coverage essentially acts like an individual retirement account, where the money is reserved for any future medical costs. By law, the tax-free savings are meant to cover out-of-pocket expenses that can occur with high-deductible insurance policies.

Instead of paying high premiums every month, the high-deductible plans leave you with a large bill right off, which can run between $1,000 to $5,100 for single coverage and up to $10,200 for a family.

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