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Which type of health plan is more likely to get workers involved in their own health care: health savings accounts (HSAs) or health reimbursement arrangements (HRAs)?
The two account-based types of health insurance
are similar, but a June 2014 report from the nonprofit Employee Benefit Research Institute (EBRI) finds that
people with HSAs are more likely to engage in cost-conscious behavior related to use of health care services than are those in HRA-linked plans.
For example, HSA participants were more likely to:
•Report that they asked for a generic drug instead of a brand name.
•Check the price of a service before getting care.
•Ask a doctor to recommend less costly prescriptions.
•Develop a budget to manage health care expenses.
•Use an online cost-tracking tool provided by the health plan.
Individuals with an HSA were also more likely than those with an HRA to be engaged in their choice of health plan; they more often reported participating in a health risk assessment, health promotion program or biometric screening program when it was available.
“HRAs and HSAs may be similar, but there are some key differences that may produce different incentives related to using health care services, and different consumer engagement experiences,” wrote Paul Fronstin, director of EBRI’s Health Research and Education Program and author of the report. “The data show that those with an HSA were more likely to respond to health pricing than were those with an HRA.”
An HSA is part of a high-deductible health plan, is owned by the individual and is completely portable, which allows individuals who do not use all the money in their HSA during their working years to use it to pay out-of-pocket expenses when they are retired.
In contrast, an HRA is an employer-funded health plan that reimburses employees for qualified medical expenses. HRAs are typically set up as notional arrangements, in which leftover funds at the end of each year can be carried over for future use (at the employer’s discretion), allowing employees to accumulate funds over time. In principle, at least, this provides an incentive for individuals to make health care purchases responsibly. However, an employer is not required to make the unused balance available to a worker when he or she leaves, and most do not.
“Ultimately, an HSA creates a stronger financial incentive than an HRA for workers to be more engaged in their health care because the account is owned by the worker and completely portable upon job change,” EBRI found.
Stephen Miller, CEBS, is an online editor/manager for SHRM. Follow him on Twitter
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