Benefits and Compensation

2007 HSA Changes May Hold Down Your Healthcare Premiums

Studies show companies offering HSAs experience lower healthcare premiums. Now Congress has made HSAs more attractive. (See box below for news about a special Audio Conference detailing these changes.)

If you haven’t yet had your yearly chat with your company’s health insurer, remember these four words when you do: “Don’t shoot the messenger.”

That’s because it’s likely he or she will be bringing the latest installment in a continuing torrent of bad news about group health insurance premiums.

According to the Council of Insurance Agents & Brokers, premiums are continuing their upward climb this year. And those hit hardest, as reported by the group’s semiannual survey, are those who can often least afford it … smaller companies. About half of companies with 500 employees or less surveyed are experiencing 11 percent to 15 percent hikes in their premiums.

Larger companies in the survey had smaller, but still significant increases of 6 percent to 10 percent. A few lucked out with hikes of only 1 percent to 5 percent.

One factor behind the smallest increases, according to additional research by Information Strategies, Inc., may be these companies’ offering their employees a Health Savings Account (HSA) program, which allows workers to divert pretax dollars from their pay into a fund to pay their medical bills. ISI reports, “employers with Health Savings Accounts reported they were receiving increases in the 2 to 3 percent range, from some insurers.”

That’s especially good news, in light of changes Congress recently made to make HSAs more attractive to both employers and employees in the hopes of increasing participation in the program. If final regulations are as expected (they hadn’t been finalized at this writing), HSAs will:

–Allow individuals to increase their yearly contribution to the full statutory limit, either individual or family, for which they qualify. (In 2006, those limits were $2,850 for employee-only coverage and $5,650 for family.) Previously, contributions were limited to the amount of their plan’s deductible if less than the limits.

–Permit a one-time rollover from IRAs, Flexible Spending Accounts (FSAs),and health reimbursement arrangements (HRAs) into HSAs. This will allow employees to better fund their HSAs in the first year of participation.

–Allow those who enroll midyear to make a full-year HSA contribution.

–Allow employers more variance in the amounts they contribute to employee accounts. They’ll now be able to contribute more to lower paid employees.

All the changes were scheduled to take effect on January 1.

Audio Conference on HSA and Other Federal Law Changes

For a full update on changes to HSA and other federal labor law for 2007, listen in on BLR’s special Federal Employment Law Update Audio Conference to be held on January 24, at 2 p.m. EST. (Adjust the hour for your time zone.) A CD recording is available if you cannot join in.

To register or to pre-order a CD, please see the announcement below.

To attend BLR’s Federal Employment Law Update Audio Conference or to purchase a CD recording of the conference, click here.

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