Study Compares Local HSAs

November 11, 2005
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GRAND RAPIDS — This month the health savings account celebrates its first birthday.

Starting in November 2004, a number of American consumers have been paying for their health-care expenses using the combination of a dedicated financial account and a high-deductible health plan (HDHP). These two components make up the HSA health insurance model.

According to a study by New York-based Mercer Human Resource Consulting, 73 percent of 991 companies surveyed either offer an HSA program now, or plan to do so by 2006. Inspired by this growing trend, Grand Rapids-based Alliance For Health set out to examine the HSA options available to West Michigan businesses.

The Alliance invited members of the business community and financial institutions with HSA offerings to join the Value Improvement Partners. The group began a study to compare the available programs. The results of the Value Improvement Partners/Health Savings Account (VIP/HSA) study have recently been released.

The study — prepared by Varnum Consulting of Grand Rapids — focuses on the financial aspects of West Michigan HSAs. Funds contributed to an HSA but not used during a given calendar year are not forfeit. Instead, they can be invested in what becomes a tax-deferred retirement account with regulations similar to individual retirement accounts (IRAs). The funds that go into an HSA can be contributed by the employer, the employee, or a combination of the two. The maximum annual contribution is determined by the deductible of the HDHP, but cannot exceed $2,650 for an individual, or $5,250 for family coverage.

The VIP/HSA compares the offerings from the four institutions that chose to participate in the 10-month study process. Those institutions are Fifth Third Bank, Mellon Financial Corp., Mercantile Bank of Michigan and United Bank of Michigan.

According to Ed Ozark, the senior human resources consultant who oversaw Varnum’s work on the project, the object of the study was to compare the various HSA options from a consumer standpoint, in order to allow individuals to make more informed choices about health-care coverage.

“I think that as an individual consumer, just like anything else, I’ll choose my HSA based on who has the best service and the lowest rates,” said Ozark.

Individuals may look for low set-up and maintenance rates, but they’re also looking for high rates of return on their excess contributions. Although it does not offer recommendations or Consumer Reports-style ratings, the study does compare the four institutions’ offerings based on 10 criteria deemed important to HSA “investors.”

There is a great deal of similarity among the plans. The primary differences are the number of fees the institution charges, the options for investing surplus funds, and the returns those funds might pay.

As for the high deductible health plan that accompanies the financial account, the study leaves that research up to the individual.

Further information about the study, and about consumer-driven health care, can be obtained from the Alliance For Health at (616) 248-3820. A more complete summary of the study can be viewed by clicking on the Education tab at www.afh.org.    

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