Plans only offered here
for less than a year
Enrollment in health savings accounts has increased steadily since they first became available in Rhode Island last fall, but Blue Cross & Blue Shield of Rhode Island and UnitedHealthcare of New England say they remain a small part of their local business.
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HSAs, introduced in other parts of the country as early as 2004, were unavailable until Sept. 1 of last year in Rhode Island because the high-deductible health plans with which they must be coupled weren’t permitted under state law. The law was changed last summer.
HSAs are tax-free accounts that consumers can use to cover medical expenses. Both employers and employees can contribute to them, and the balances roll over from year to year.
UnitedHealthcare introduced its iPlan HSA program in Rhode Island on Sept. 1, after lobbying for the law change. Since then, CEO Stephen J. Farrell said, the company has enrolled more than 5,000 members, most of them effective Jan. 1.
“There’s been some slow takeup in New England,” Farrell said. “But I think we’re seeing that takeup accelerate.”
Farrell credited United’s success in implementing the program to its corporate parent’s experience rolling out HSA plans across the country.
“We were able to take the resources and innovation of our national organization and deliver through our New England health plan products and health care solutions to the marketplace,” he said.
Matthew T. Brannigan, vice president of sales and marketing for Blue Cross, said his company, which introduced HSAs last Oct. 1, currently has 2,282 people enrolled in the accounts – a number that is growing.
“Though the total numbers in just HSAs are not that large, they are growing each month as people start to consider them,” Brannigan said. “We knew that it was going to be something that built momentum over time. Presently, it’s right about where I thought it would be sales-wise.”
Though the numbers continue to increase for both companies, Rhode Island enrollment is just a sliver of the national picture. According to the U.S. Department of the Treasury, 3.2 million people now have HSA-eligible plans, a sevenfold increase since HSAs were first introduced in 2004. By 2010, the Treasury projects that as many as 14 million people could have HSAs.
Brannigan said he has seen a change in health plans that could be a precursor to more HSA enrollment in Rhode Island. Five years ago, he said, none of Blue Cross’ customers had plans with large deductibles. But now about 60,000 members have high-deductible plans.
Both Brannigan and Farrell said that programs such as flexible spending accounts (FSAs), which have a “use it or lose it” clause, and health reimbursement arrangements (HRAs), through which employers reimburse employees for medical expenses, remain more popular.
FSAs and HRAs have been on the market for a longer time, however, and HSAs may be starting to catch up.
Joel Cooper, president of USI Rhode Island, a benefits brokerage, said of the last 1,000 clients for which his office has set up health plans, about 100 companies have opted to offer HSAs. While HSAs have not experienced widespread popularity yet in Rhode Island, Cooper expects more people to enroll in them as time passes.
“When 401(k) programs first came out, people were skeptical,” Cooper said.
Farrell said United is seeing great interest in HSAs among small professional services businesses, such as law and accounting firms. The large deductible, which is a minimum $1,050 for an individual or $2,100 for a family, are better suited for high-income individuals. Additionally, more money can be deferred for a person’s retirement, Farrell said.
In a separate interview Cooper agreed, adding that because younger employees generally have lower health care costs than older employees, HSAs can benefit them as well.
“It’s really good for young people, it’s really good for high-income people, and it’s really good for people that have an employer who has reached the end of their rope” with health insurance costs, Cooper said.
