- Announcing VSRA Association Dental Plan
In response to the overwhelming success of the VSRA Association Medical Plan, we are launching an association dental plan for January 1, 2012 start dates. The plan is insured by Assurant Employee Benefits, a national top ten dental insurance company with approximately 1000 network dental providers in Hampton Roads. - Read More
Health Insurance Reform Ignores Proven Savings, Will “Kill” HSAs for Health Plans in Virginia
by Gregg Kennerly | Published Monday, June 28, 2010
A United HealthCare study published in late 2009 confirms that Health Savings Account plans lower costs in the second and subsequent years of enrollment. The results demonstrated that utilization and costs were lower across both large and small employer populations. In spite of these findings, The Patient Protection and Affordable Care Act of 2010, popularly know as “Health Reform”, threatens to derail the adoption of HSAs and High Deductible Health Plans.
The United HealthCare Study showed that employers who implemented HSAs had substantial declines in hospital admissions and emergency room visits. Although the number of prescriptions increased, the overall pharmacy cost declined, suggesting more extensive use of cost-effective generic drugs. The intended effect of encouraging employees to take more control of their own medical care spending seems to be working in HSA plans, the study concludes.
Inexplicably, PPACA as passed will place onerous restrictions on HSA plans that will make them much less appealing. Starting in 2011, the maximum deductibles allowed for health plans will go down to $2,000 per individual and $4,000 per family. This is much lower than the current HSA plan maximums. This will drive up premiums for HSA compatible plans.
The Federal Health and Human Services Secretary has the ability to define “essential” benefits that must be included in all plans. For example, the proposed low-cost plan for people under 30 MUST cover at least three primary care office visits. This would eliminate HSA qualified high-deductible plans, as they now must have no coverage before the deductible.
Two more provisions threatening HSAs are those that prohibit plans from covering any OTC drugs, and a doubling of the penalty for non-qualified withdrawals to 20% from 10% currently. The ability to pay for some non-prescription drugs with pre-tax dollars is one of the key attractions of HSAs. Increasing the penalty to 20% is just another message that the feds really don´t like HSA plans and would like them to be eliminated.
We can only hope that these actions are not born of some misguided impression that HSAs are only understood and adopted by highly compensated employees and industries. In my experience, this is not true. My staff wrote and implemented the first HSA plan in Virginia in early 2004—at an auto body shop. As far as I know, the plan is still in force.
Since it is proven that HSAs and other “Consumer Driven Health Plans” lower costs, you have to wonder why the administration favors premiums over savings that give employees skin in the game. But then again, The Patient Protection and Affordable Care Act contains nothing that will make coverage more affordable by addressing the root causes of high costs such as malpractice insurance/defensive medicine and fee-for-service reimbursement of health care providers.
In his career, Gregg has developed specialized expertise in “consumer-driven” and high deductible health plans with HSA and HRA strategies, and sold the first HSA plans issued in Virginia through Assurant Health. He is an expert in analyzing plan design data and has served as account executive for national accounts such as Coca-Cola Enterprises and Tenet HealthCare. Gregg utilizes a strategic approach to establish goals based on each client’s unique culture and competitive environment, and measuring results against jointly established criteria.
Gregg Kennerly is a Principal at Advanced Benefit Strategies of Virginia, LLC.
