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Human Resources

Health Savings Accounts: Money Saved

health savings accounts are money saved

Findings from Mercer, a health care consultant group, show that health savings accounts (HSAs) combined with high-deductible health plans (HDHPs) can save as much as $1,700 per employee, compared to traditional Preferred Provider Organization plans.

According to the Mercer study, employee health care costs were averaging $10,779 per employee in 2013, including contributions from employers and employees alike.

Overall, employers had seen a substantial slowdown in escalating health care costs per employee compared to previous years, with average increases running only 1 percent. Mercer attributes much of that slowdown to the increasing adaptation of health savings accounts and high deductible health plans.

Health savings accounts with high-deductible health plans save employers about 17 percent of health care costs as opposed to a comparable PPO plan, and 20 percent less than a comparable HMO plan. Average costs according to the Mercer study are laid out below.

-Average health care cost per employee, 2013: $10,779

-Average HMO Cost: $10,612

-Average PPO Cost: $10,196

-Average HSA/HDHP Cost: $8,482

As the name implies, these policies have higher deductibles than many other plans available in the workplace market, which keeps insurance company expenditures on minor ailments and incidents relatively low. This, in turn, helps manage premiums.

In return for the higher deductible, workers receive a tax break on any money they contribute to health savings accounts.

For tax year 2014, individual workers can contribute up to $3,300, while families can contribute up to $6,550. These figures include any employer contributions. HSA participants age 55 or older can contribute an additional $1,000 per year.

Contributions are tax-deferred when made, and any withdrawals for qualified medical expenses are tax-free.

Consumer-directed health plans comprised 18 percent of the market in 2014 – up from 16 percent in 2012. This type of plan is particularly popular in the Midwest, where enrollment in consumer-directed health plans now doubles enrollment in HMOs at 27 percent of the work force, according to Mercer.

According to the study, migrations to HSAs are part of an overall trend of higher deductibles across the board, as employers shift more of the burden of health care costs to the workers themselves. For example, the average in-network PPO deductible rose 15 percent, to $1,663, in 2013.

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