Accounting Web featured an article applauding the value that HSA’s (Health Savings Accounts) may add to health care options during this fall’s open enrollment season. High deductible health plans (HDHP’s) paired with an HSA account give employees the option to shoulder the burden of first dollar coverage (up to their deductible – minimum of $1,100 for individuals and $2,200 for families) while maintaining an adequate plan to cover catastrophic events.
This is an excellent option for those that are not often sick and will likely need only routine checkups to maintain their health. Many HDHP plans offer coverage for preventative care in total, but not for sick care. However, those with young children or sickly spouses will quickly eat up big chunks of their deductible on sick care and have to shoulder the burden of these costs up to their deductible amount.
In the end, a lower upfront premium can become a higher total cost of health care for employees with families that do not have an alternative option elsewhere. However, insurance companies will penalize employers for offering an regular PPO plan alongside the HDHP plan because of issues with adverse selection (those with families and those that are sickly will likely choose the regular PPO, while the young, single, and healthy will take advantage of the premium savings and tax advantaged savings in the HDHP/HSA combination).
For employers and employees in the open market more options are better, but for those that switch from a regular PPO as their only option to an HDHP/HSA combination as their only option, the winners will be the employers and young, single, and healthy employees at the expense of employees with families that do not have a PPO option through the spouses employment (it is very likely that both spouses may simultaneously lose the PPO option as employers opt for lower premiums offered by the HSA/HDHP combination).