Recent federal rule clarifications regarding health savings accounts will let employers put more money into the accounts of employees who participate in health-wellness programs and improve their health as a result.
Such incentives will be allowed starting at the beginning of 2007 due to a clarification handed down by the U.S. Department of Treasury earlier this summer. Wellness-program advocates say such incentives could cause more people to take part in the programs and that could lead to a healthier work force, which ultimately would help keep employers insurance premiums down.
In the end, it does make a huge difference, says Kathy Gordon, director of the work-site health promotion program at the Physician Hospital Community Organization, a Spokane-based health-plan administrator commonly known as the PHCO.
For employers, health savings accounts are said to be a less-expensive alternative to offering conventional group health-insurance plans that carry low deductibles for insureds. Health savings accounts are used in tandem with a high-deductible health plan, sometimes referred to as an umbrella plan or a major-medical plan.
Generally speaking, an employer pays for the umbrella plan and also puts a certain amount of money into each employees health savings account at regular intervals. The employee also contributes pre-tax money to his or her account, usually through payroll deduction.
Mark Newbold, employee-benefits adviser for Spokane-based Moloney+ONeill Benefits, says federal guidelines set the minimum deductible for umbrella plans at $1,050 for individuals and $2,100 for families. Oftentimes, however, employers chose umbrella plans with much higher deductibles than that, greater than $2,000 for individuals and more than $2,500 for families, to realize cost savings.
Account holders use money accumulated in their accounts to pay for medical expenses up to the amount of deductible under the umbrella plan, and the umbrella plans coverage kicks in once expenses exceed that amount.
Because employees manage their own health savings accounts, the accounts are seen as a way to encourage employees to shop carefully for health-care servicesideally holding down costs through their own decision-making ability. Money that isnt used in the year its contributed to an account can be carried over into following years. Employees can withdraw money from the account at any time for expenses not related to health care, but they then must pay income taxes and a penalty for doing so.
Federal guidelines set the maximum annual contribution amount, by both an employer and an employee, at the lower of the following: 100 percent of the plans deductible or $2,700 for individuals and $5,450 for families.
Wellness programs can be beneficial regardless of the type of health plan a company offers, Newbold says. He says, though, that offering wellness programs in conjunction with health savings accounts is especially important. Since employees manage their own accounts, they should try to remain healthy to keep from depleting their accounts.
The two have to go hand in hand, Newbold says. One without the other, in the long run, is not going to accomplish the goals that you have.
The PHCO and Community Health Association of Spokane are among those that offer wellness programs.
The PHCO conducts wellness fairs for companies in order, first, to educate people about how to lead a healthy lifestyle, then to help them monitor progress as they work to improve their health, the organizations Gordon says.
At such an event, she says, the PHCO offers to test cholesterol, blood-sugar levels, blood pressure, body-fat percentage, body-mass index, hip-to-waist ratio, and bone density. It also offers a confidential health-risk assessment survey that covers general health, depression, stress and anxiety, and headaches, among other conditions.
Without divulging the details about any individuals health, the PHCO puts together a companywide report on employees health for an employer to address in general terms where its work force stands in terms of health and makes recommendations of programs that an employer might consider offering based on that information, Gordon says. For example, she says, the organization has put together weight-loss programs for some companies and heart-health programs for others.
The organization has conducted wellness fairs annually for some employersfree of charge for employers whose plans the PHCO administratesand it now has multiple-year results for some employees, Gordon says.
Incentives that involve adding more money to a persons health-savings account likely will be geared toward encouraging people to attend wellness fairs or similar events, then eventually will evolve into incentives for showing results of improved health, such as lower blood pressure or an improved body-mass index.
Employers offer different kinds of incentives to workers to lure them to such events. For example, she says, one employer offered $25 gift certificates to employees who attended a wellness fair. The promotion worked well, she added; the event attracted more than 100 people, compared with an earlier event by the same employer that drew only 40 people.
It would be nice if everybody wanted to be healthy, but usually it takes the incentives to get them to opt into the program, Gordon says.
Health savings accounts were created in 2003. While theyve have been touted for their cost savings for employers and the control they give employees, Newbold says theyve received mixed reviews so far.
Inevitably, when a company begins offering such accounts, some workers will incur substantial health-care costs before they have enough money built up in their accounts, Newbold says. That means some employees could face substantial out-of-pocket costs, he says.
He says that health insurance claims typically follow the 80-20 rule, in which 80 percent of the claims are filed by 20 percent of the insureds, which can mean that health savings accounts might not work well for a company and its employees in the early days of such a program.
Can employers get through that transition period knowing that 20 percent is going to be adversely effected? he says.
Generally speaking, he says, health savings accounts receive positive remarks from professional concerns where the bulk of the employees make comparable wages, but companies with stratified work forces often have lower-paid employees encounter more problems in making the program work satisfactorily for them.
Contact Linn Parish at (509) 344-1266 or via e-mail at email@example.com.
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