Health Insurance Daily

State Finds HSAs Popular With Highly Paid Parents

South Carolina's experience with state employees may provide helpful guidance for employers deciding whether to offer a health savings account.

The state's HSA enrollees had an average age of 41.1 years and tended to be high-income parents. This example seems to debunk the notion that HSAs will attract primarily young, healthy workers.

Robin Tester, director of the State of South Carolina Employee Insurance Program, says, "The contention that we would have only young, single people has not proven to be the case. Clearly, income makes a difference in whether you sign up for an HSA or not."

About 1% of the state's workers, or 3,800 people, enrolled in an HSA-qualified health plan, and 38% of those individuals opened an HSA. At least 211 of the HSA-users also have a limited-purpose FSA. The state initially worried that offering an HSA might lead to adverse selection, in which healthy people wind up in a different health plan than sicker people, Tester admits, but that fear didn't materialize. The HSA option has been fairly well received by employees who used it, he adds.

The state introduced the HSA-qualified health plan this year and does not contribute to the accounts.

This article was published by BenefitNews, October 20, 2005.

posted by Mike @ 9:41 PM