KANSAS CITY, Mo.--(BUSINESS WIRE)-- Offered since 2004, Health Savings Accounts (HSAs) are still relatively new to the health care marketplace. The relative newness of these accounts leaves much room for education and opportunity for misconceptions. Dennis Triplett, CEO of UMB Healthcare Services, a division of UMB Financial Corporation (NASDAQ: UMBF), provides the following perspective to address common myths surrounding HSAs:
MYTH: HSAs are only for the wealthy
Given the fact that HSAs are paired with high-deductible health plans, it is a common misconception that HSAs are best-suited for persons with high incomes who can more easily afford to pay for a high deductible than a person with an average income. In reality, HSAs are a powerful vehicle to save and pay for health care expenses, regardless of income level. According to a March 2011 study by Employee Benefits Research Institute, a little more than half of HSA plans are enrolled in by families with incomes of less than $100,000.
HSAs partnered with a qualified high-deductible plan can be cost effective through monthly premium reductions that allow for contributions to an HSA to prepare for future health-related expenses. Research also shows that the annual premium costs for families decreases by an average of $2,350 for an HSA-eligible plan compared to a traditional plan, and that the premium savings covers nearly 60 percent of the average HSA-eligible plan’s deductible (The Kaiser Family Foundation and Health Research & Educational Trust 2010 Annual Survey Employer Health Benefits).
MYTH: HSAs are just for the young and healthy
Regardless of a person’s age or health, HSAs are useful. In fact, HSA enrollment is nearly equal across age groups. Forty-nine percent of all HSA/high-deductible health plan enrollees in the individual market, including dependents covered under family plans, were age 40 or older, according to a January 2011 report from America’s Health Insurance Plans.
HSAs can be a long-term investment opportunity, but that is not the only opportunity for these accounts. They can also be an effective tool for those who are nearing retirement age and looking for a virtually tax-free account to save for health care expenses during their pre-retirement years. People aged 55 and older have the opportunity to make catch-up contributions each year that is over and above the allowable limit for the individual year. The catch-up contribution for 2011 is $1,000, and one is able to make contributions until he or she becomes Medicare active.
MYTH: HSAs provide limited coverage
Qualified high-deductible plans coupled with HSAs actually provide comprehensive health care coverage. Most HSA-qualified plans cover prescription drugs, doctor’s office visits and preventative care without a deductible. This typically includes: prescription drugs, doctor’s office visits, emergency room visits, hospitalization and lab and X-ray services.
One key difference with coverage and costs is that consumer-directed plans emphasize individual decision-making. Participants have an incentive to avoid paying for unnecessary services because they keep the money they don't spend. In the end, this demonstrably improves health care costs, efficiency and wellness.
MYTH: HSAs are simply shifting costs to individuals
Employers are not the sole benefactors when implementing consumer-directed plans. Establishing HSAs is not just about helping employees create a medical savings account; rather, it is about creating equity, building value and helping employees better manage their dollars and their health. In conjunction with a high-deductible health plan, HSAs encourage employees to share the responsibility—and the rewards—for more closely monitoring their health and the cost of their care. Because they are invested in their own care, employees become better health care consumers, and better consumers make better choices.
In dispelling these common myths, one can more clearly understand that HSAs are advantageous for all Americans – regardless of income, age or health. A unique and powerful tool, an HSA can be used to provide comprehensive coverage now, as well as save for future expenses.
UMB Financial Corporation (NASDAQ: UMBF) is a financial services holding company headquartered in Kansas City, Mo., offering complete banking, asset management, health spending solutions and related financial services to commercial, institutional and personal customers nationwide. Its banking subsidiaries own and operate banking and wealth management centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska and Arizona. Subsidiaries of the holding company and the lead bank, UMB Bank, n.a., include mutual fund and alternative investment services groups, single-purpose companies that deal with brokerage services and insurance, and a registered investment advisor that manages the company's proprietary mutual funds and investment advisory accounts for institutional customers. For more information, visit umb.com or follow us on Twitter at @UMBFinancial.
UMB Financial Corporation
Mandie Nelson, 816-860-5088
Elizabeth O’Neill, 816-423-6139
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