Account-based health plans in the U.S. continued to grow in 2011, increasing to $12.4 billion in assets among 8.4 million accounts, according to a survey by the not-for-profit Employee Benefit Research Institute (EBRI) and research firm Mathew Greenwald & Associates (MGA).
The average health account balance was $1,490 in 2011, up 9 percent from 2010. This growth comes after a leveling-off of account balances during the recession years of 2008 and 2009, and a slight decline in 2010.
These and other findings are based on the results of the 2011 EBRI/MGA Consumer Engagement in Health Care Survey, published in the January 2012 EBRI Issue Brief, “Health Savings Accounts and Health Reimbursement Arrangements: Assets, Account Balances, and Rollovers, 2006–2011.”
Driving Health Care Consumerism
The combination of a tax-preferred savings or spending account with a high-deductible health plan (HDHP) is commonly referred to as a consumer-driven health plan (CDHP). While these plans currently have a small market share, they have been growing steadily while traditional health plans have been losing market share, EBRI data show.
Employers first started offering account-based health plans in 2001, when a handful of employers began to offer health reimbursement arrangements (HRAs), employer-funded health plans that reimburse workers for qualified medical expenses. In 2004, employers were able to start offering health plans with health savings accounts (HSAs), tax-exempt trusts or custodial accounts funded by employers and/or employees, which individuals can use to pay for health care expenses.
The theory behind these accounts is that by giving individuals more control over funds allocated for health care services, they will spend the money more responsibly and choose to avoid unnecessary overuse of health care, especially once they become more educated about the actual price of health services. (To learn more about HRAs and HSAs, see the SHRM Online article "Consumer-Driven Decision: Weighing HSAs vs. HRAs.")
The EBRI report noted that by 2010, 16 percent of U.S. employers with 10-499 workers and 23 percent of those with 500 or more workers offered either an HRA or HSA-eligible plan. As a result, these plans covered about 21 million people in 2011, representing about 12 percent of the privately insured market.
“As the number of people with account-based plans grows, total assets in these plans can be expected to grow as well,” said Paul Fronstin, director of EBRI’s health research and education program and author of the report.
Differences in Account Balances
Men have higher account balances than women, and older individuals have higher account balances than younger ones, the survey showed. Account balances increased with household income, but education had a significant impact on account balances independent of income and other variables.
With regard to gender, men had an average of $1,735 in their HRA or HSA while women had $1,403. This may be due to the fact that men use less health care than women, which allows them to maintain a higher account balance.
Men tend to make fewer visits to their doctors, which would be one factor leading to their higher account balances.
Differences in Annual Rollover Amounts
Any unspent funds in an HSA may be rolled over to the next year. Most HRAs also allow attributed funds to accumulate from year to year; however, this is not required and is at the employer's discretion.
In 2006, 23 percent of individuals with an HRA or HSA did not roll over any money. By 2011, only 13 percent did not have a rollover, the survey revealed. In addition:
• Rollover amounts have increased. After declining to $1,029 in 2010, the average amount being rolled over from one year to the next increased to $1,208 in 2011. Total assets being rolled over increased as well: $6.7 billion was rolled over in 2011, up from $3.7 billion in 2010.
• Differences in rollover amounts by demographics. Men rolled over more money than women, and older individuals had higher rollover amounts than younger individuals. Rollover amounts increased with household income and education, and individuals with single coverage rolled over a slightly higher amount than those with family coverage.
In 2011 the average rollover was $795 among individuals with less than $50,000 in household income, $843 among those with $50,000−$99,999, and $1,358 among those with $100,000 or more in household income.
Higher-income households may contribute higher amounts to their HSAs than lower-income households. However, the findings also might indicate that higher earners are more likely to pay medical bills out-of-pocket and use their accounts to build for future medical expenses or for retirement savings.
The 2011 survey was conducted within the U.S. from Aug. 8-23, 2011, among almost 2,000 adults age 21−64 who have health insurance through an employer or purchased directly from a carrier.
CDHP Enrollees Show More Cost-Conscious Behavior
Individuals in CDHPs were more likely than those with traditional coverage to exhibit a number of cost-conscious behaviors according to a related EBRI/MGA analysis, Findings from the 2011 EBRI/MGA Consumer Engagement in Health Care Survey.
Those in CDHPs were more likely to say that they had:
• Checked whether their plan would cover care.
• Asked for a generic drug instead of a brand name drug.
• Talked to their doctor about treatment options and costs.
• Talked to their doctor about prescription drug options and costs.
• Developed a budget to manage health care expenses.
• Checked a price of service before getting care.
• Used an online cost-tracking tool.
Stephen Miller, CEBS, is an online editor/manager for SHRM.
Behavioral Economics Improve Workforce Health Decisions, SHRM Online Benefits Discipline, January 2012
Consumer-Driven Decision: Weighing HSAs vs. HRAs, SHRM Online Benefits Discipline, May 2011
Promoting Health Care Consumerism: A Multifaceted Approach, SHRM Online Benefits Discipline, November 2011
HSAs Viewed as Cost-Saving Option by Employers and Account Holders, SHRM Online Benefits Discipline, November 2011
Culture of Saving: HSA Participants Save More in Their 401(k)s Across All Compensation Levels, SHRM Online Benefits Discipline, August 2011
Health Savings Accounts Can Build Retirement Wealth, SHRM Online Benefits Discipline, October 2010
SHRM Online Benefits Discipline
SHRM Online Health Care Reform Resource Page
SHRM Online Retirement Plans Resource Page