Should employees be automatically enrolled in health savings accounts (HSAs)?

No

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by Carolyn Teasley

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Should Employees be Automatically Enrolled in Health Savings Accounts (HSAs)

Health Savings Accounts were first introduced by the Medicare, Prescription Drug, Improvement and Modernization Act of 2003 signed into law by President George W. Bush. These new improved Health Saving Accounts were to replace Flexible Spending Accounts (FSAs). The HSAs were intended to help employees pay for current medical expenses or to be saved toward future medical expenses.

Health Savings Accounts can be a positive employee benefit if used correctly. The main reason why I do not feel enrollment should be automatic is the employee should have the right to choose to participate and how much pre-tax pay should be deducted to the HSA funding account. An employee's yearly out of pocket medical costs for him/her or family members must be considered as they are subject to change. If married, has the employee's spouse already enrolled at his/her workplace in a HSA? If so, does this make an additional HSA unnecessary? Will this loss of income going into the second HSA funding create a financial hardship from the reduced take home pay? Only the employee and spouse can correctly answer these important financial questions.

Another possible disadvantage to be considered is the high deductibles health insurance plan (HDHP) the employee must select in order to be eligible to participate in a HSA plan. The minimum deductibles are $1100 individuals and $2200 families. If the employee or family members covered by the employee's health insurance have chronic illnesses, the high deductible health insurance may not be a sound economical choice. HSAs have been noted to better benefit healthy people, who use less health insurance benefits coverage. (healthsavingsinfo.c om)

In a press release from Senator Conyers (Conyers, J., 2006, January 31), he opposed the belief HSAs would benefit all American workers. He also stated the benefits of the HSAs were more for the businesses and would "dump" the costs of health care on the shoulders of the employees.

The Tax Relief and Health Care Act of 2006 was passed by Congress and signed into law by President Bush on December 20, 2006. Noted changes were made to the amount an employee may deduct before taxes to a HSA plan, from $2700 to $2850 for individuals and from $5450 to $5650 effective in the beginning of 2007. (Hoven, V., The Tax Releif and Health Care Act of 2006 table of contents)

The answer to this question is not clearcut. Some of the advantages of the HSAs make this a choice that will require much research and good decision making skills. The HSAs appear to be an opportunity for the employees to be in control of their health care. But how many mid-wage and lower workers can afford funding necessary to take full advantage of the plan and meet the high out of pocket deductibles from the HDHPs?

References:

http://www.healthsav ingsinfo.com/

http://www.house.gov /list/press/mi14_con yers/1_31_2006a.html

Hoven, V., The Tax Relief and Health Care Act of 2006 table of contents Retrieved from http://www.hoven.com /articles/pdf/extend erbill1208.pdf

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