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HSA Observations

Thousands of small employers have already been approached by producers encouraging them to offer the very affordable HDHP as either an individual or an employee-pay-all sale.

One area in which consumers with an HSA will modify spending is Rx; generics will be sought rather than brand.

Among individual HSA applicants, some 27% have a net worth of less than $25,000. This debunks to some extent that HSAs are only for the rich.

The endorsement of the HSA concept by the Federal Employee’s Health Care Plan enhances its chance for public acceptance.

States are busy at work modifying their laws to accommodate the HSA. Changes are primarily needed on state tax law and mandated benefits. Many states have already put such needed legislation in place.

Detractors to the HSA say:

  • It favors the rich because the poor have no interest in the tax-exemption features.

  • It favors the well and the young leaving the sick and old to bear a greater share of the cost.

The portability feature of the HSA is being touted as a big plus.

Model documents for HSA trusts and custodial accounts have been published by the Treasury Department.

The 401(k) is an engine of tax-deferral while the HSA is an engine of total tax- exemption. This is no minor distinction.

Banks are getting interested in HSAs because the law does not require that they be claims adjudicators.

Economists have long pointed out the oddity of medical care in that as the price went up, so did the demand. In the post-HSA environment, the economists are pointing out that the reverse is also true.

In several states (Florida, e.g.) the top political figures have actively promoted the HSA option by means of town hall meetings.

© 2004 International Foundation of Employee Benefit Plans, Inc. All rights reserved.

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