The number of Americans using health savings accounts is poised to grow quickly, recent research suggests, but more work is needed to help people understand how the accounts and their accompanying insurance plans work.
Mintel International Group Ltd. projects that 29.5 million enrollees and dependents will be in high-deductible health insurance plans and HSAs by the end of 2009. That would be a 554% increase from the 4.51 million people the Chicago market research firm estimates were covered by such plans last Dec. 31.
Health savings accounts, which let workers save for medical expenses tax-free, began to appear in 2004 to complement high-deductible insurance plans. By the end of last year 3.6 million of the accounts had been opened, with $5.1 billion of deposits, according to an estimate by Information Strategies Inc., which tracks the product. The Palisades Park, N.J., company predicts eight million accounts, with $13.6 billion of deposits, by Dec. 31.
Structural changes appear to have primed the product for growth. The Tax Relief and Health Care Act of 2006, which President Bush signed into law last month, allows a one-time rollover into HSAs from flexible spending accounts, health reimbursement accounts, or individual retirement accounts. Also, savers no longer need to limit their contributions to the corresponding health plan's annual deductible cost.
In addition, people who open an HSA after their health plan's term begins can still deposit the total annual amount allowed. This year the contribution cap rose 5.6% for individuals, to $2,850, and 3.7% for families, to $5,650.
But HSAs' growth could be hindered by widespread ignorance about the product, as well as a failure by providers to continually educate, Mintel warned.
Executives at banks that offer health savings accounts agreed that education is a big challenge.
"Insurance has been extremely confusing for most of us for all of our years," said Lee DeTurk, the HSA officer at Tower Financial Corp. in Fort Wayne, Ind., which has sold about 8,000 health savings accounts. "And with a high-deductible plan, everything is your responsibility until you reach the deductible limit."
Many banks say they now have customer service reps who focus on answering questions about health savings accounts. But part of the education shortfall is beyond banks' control, said Kirk Hoewisch, the president of HSA Bank, a subsidiary of Webster Financial Corp. in Waterbury, Conn.
Custodians and insurers can supply thorough, easy-to-understand materials, he said, but it is largely up to employers to put them into workers' hands.
Regulatory changes signed into law last year reinforce the importance of continuing education for HSA account holders, he added. His bank has 180,000 health savings accounts.
Mintel's projection takes into account the rate at which individual retirement accounts and 401(k) plans grew in their early years, said Susan Menke, a senior financial services analyst.
"This is a more pressing and immediate problem, so the growth rate will be a little greater, I imagine," she said.
But growth could be hindered by confusion among consumers, Mintel's report warned. In a survey of 2,000 adults done for Mintel, "don't know" was the most frequent answer to questions about HSA features and preferences.
Furthermore, in every age group, at least half said that they did not know what an HSA is or were not interested in one, even if their employer contributed to it.
As they gain experience with HSAs, banks are fine-tuning their educational tools and tactics. Last fall, HSA Bank started offering "Webinars" on the Internet to train employers and sales agents.
UMB Financial Corp. in Kansas City, Mo., is creating a service that will send HSA information directly to mobile phones using Adobe FlashCast technology, said Dennis Triplett, the president of the bank's health-care services unit, which has $85 million of HSA deposits and investments.
In April Golden Rule Insurance Co., a unit of UnitedHealthcare, started a Web page it bills as a one-stop site for comprehensive HSA information. Golden Rule's sister company, Exante Bank, has 300,000 health savings accounts.
But technology is limited as a tool to reach the employees who use health savings accounts because they often are blue-collar workers lacking computer savvy, said Tower Financial's Mr. DeTurk. Tower started a paper newsletter this year that it distributes to employers and mails to employees along with their account statements.
"As much as we all want to rely on electronics, in the manufacturing world they don't spend their time on the computer," he said.
