Health savings accounts and high deductible health plans: are they an option for low-income families?
- Collection:
- Health Policy and Services Research
- Series Title(s):
- Issue paper (Kaiser Commission on Medicaid and the Uninsured)
- Author(s):
- Hoffman, Catherine, author Tolbert, Jennifer, author
- Contributor(s):
- Henry J. Kaiser Family Foundation, issuing body. Kaiser Commission on Medicaid and the Uninsured, issuing body..
- Publication:
- Washington, DC : Kaiser Commission on Medicaid and the Uninsured, October 2006
- Language(s):
- English
- Format:
- Text
- Subject(s):
- Deductibles and Coinsurance Insurance, Health Medical Savings Accounts United States
- Genre(s):
- Technical Report
- Abstract:
- Health Savings Accounts are a type of medical savings account that allow consumers to save for medical expenses on a tax-free basis. They are linked with high deductible health plans (HDHPs), and together these insurance and savings options represent a new approach to health care, commonly referred to as consumer-directed care. Health Savings Accounts (HSAs) were federally enacted as part of the Medicare Prescription Drug Improvement and Modernization Act of 2003. To establish an HSA a consumer must enroll in an HDHP that meets certain requirements. In 2006, an HSA-qualifying HDHP must have a deductible of at least $1,050 for single coverage and $2,100 for family coverage. The plan must also limit the total amount of out-of-pocket cost-sharing for covered benefits each year to $5,250 for single coverage and $10,500 for families. Compared to more traditional insurance plans, HDHPs generally require greater out-of-pocket spending, although the premiums may be lower. HSAs offer consumers a way to save for these higher expected health care costs. A key advantage of an HSA is that it belongs to the individual who establishes it and is portable. Funds that are not withdrawn in a year can be rolled over and used in future years. Once the HSA is exhausted however, there are no further tax advantages to help defray additional out-of-pocket expenses. HSA-qualified health plans are currently a small segment of the health insurance market. In 2006, about 1.4 million employees are enrolled in HSA-qualified HDHPs offered by their employers; and at least another 855,000 people are covered in the nongroup market. While HSAs and their associated HDHPs have been forwarded as one solution to increasing health care coverage and reducing overall health care costs, a key question is whether these HSAs and HDHPs represent a viable health insurance option for low-income families. Analyses of available data and relevant research suggest that HSAs and HDHPs are no more affordable for low-income families than existing plans, and the high deductibles associated with these plans may shift even more health care costs onto them.
- Copyright:
- Reproduced with permission of the copyright holder. Further use of the material is subject to CC BY license. (More information)
- Extent:
- 1 online resource (1 PDF file (22 pages))
- Illustrations:
- Illustrations
- NLM Unique ID:
- 101302965 (See catalog record)
- Permanent Link:
- http://resource.nlm.nih.gov/101302965