ACA & The New Normal

Has Enrollment in HSA-Eligible Health Plans Stalled?

Study reveals very little growth in HSA-eligible health plan enrollment since 2014

New research from the Employee Benefit Research Institute (EBRI). 

In its new Issue Brief, “Has Enrollment in HSA-Eligible Health Plans Stalled,” the Employee Benefit Research Institute (EBRI) finds that across five separate surveys, growth rates in Health Savings Account (HSA)-eligible health plan enrollment have been trending down.

EBRI researchers examined estimates from the EBRI/Greenwald & Associates Consumer Engagement in Health Care Survey, America’s Health Insurance Plans, Kaiser Family Foundation, Mercer, and the National Center for Health Statistics. The surveys consistently found that enrollment growth rates have been trending down since 2007—from as high as nearly 70 percent a decade ago according to one survey, to no more than 12 percent and as little as zero percent in 2017, according to the surveys.

“One factor that may be holding back growth in HSA-eligible health plan enrollments may be that employers don’t find the desired level of flexibility around the design of the health plan,” said Paul Fronstin, Director of EBRIs Health Research and Education Program. “Combine that with recent low health insurance premium increases and low unemployment, and employers may be holding off on plans to move to HSA-eligible health plans.”

EBRI notes an important difference between studies that focus on HSA-eligible health plan enrollment and those that focus on growth in the number of HSA accounts. While the latter surveys may show increases in the number of accounts, many HSAs are unfunded, and a growing number are not receiving contributions, suggesting that the number of HSAs may include accounts owned by people who have disenrolled from an HSA-eligible health plan. As such, simply looking at the number of accounts may not a good proxy to measure trends in HSA-eligible health plan enrollment.

Excerpts from the report

In 2003, the Medicare Prescription Drug, Improvement, and Modernization Act (MMA) included a provision that created
health savings accounts (HSAs) and HSA-eligible health plans. The provision allows individuals enrolled in highdeductible
health plans meeting certain requirements to open and fund a health savings account (HSA), a tax-exempt
trust or custodial account that is funded with contributions and assets that an individual can use to pay for health care
expenses.

Individuals can contribute to an HSA only if they are enrolled in an HSA-eligible health plan, and they benefit
from a triple-tax advantage: employee contributions to the account are deductible from taxable income, any interest or
other capital earnings on assets in the account build up tax free, and distributions for qualified medical expenses from
the HSA are excluded from taxable income to the employee.

Both the number of HSAs and enrollment in HSA-eligible health plans have grown significantly since HSAs first became
available in 2004. In 2017, enrollment estimates in HSA-eligible health plans vary considerably from 21.4 million to 33.7
policyholders and their dependents. But there is one consistency between the enrollment estimates – most sources
show that growth appears to have slowed in 2017, especially when looking at the market share of HSA-eligible health
plan enrollment.

a triple-tax advantage: employee contributions to the account are deductible from taxable income, any interest or other capital earnings on assets in the account build up tax free, and distributions for qualified medical expenses from the HSA are excluded from taxable income to the employee

This Issue Brief examines trends in enrollment in HSA-eligible health plans. It examines surveys of individuals,
employers, and health plans. It puts the trends in enrollment in the context of the health policy environment. It also
discusses why inconsistencies exist across the various ways in which trends in enrollment are measured, and ends with
a discussion of what might be holding back growth in HSA-eligible health plan enrollment.

Average Enrollment Growth Rates, by Time Period
The surveys also report consistent growth rates over select time periods. In order to examine growth rates over time, we examine average annual growth rates for the following four time periods:

  • 2007-2009
  • 2010-2012
  • 2013-2016
  • 2017

These time periods were chosen because they represent distinct public policy periods. Public policy was stable from 2007 to 2009, as there were no major health policy initiatives in Congress. It was post-MMA and pre-ACA. The Patient Protection and Affordable Care Act (ACA) passed in March 2010, and was followed by years of uncertainty regarding how the ACA would be regulated and its impact on insurance markets. Policy stability returned from 2013 to 2016.

The regulations for most parts of the ACA had been released and were being implemented, though that often meant implementation of significant health plan changes. The end of 2016 brought renewed uncertainty with the presidential election and the possibility of repeal and replacement of the ACA. It can be argued that when it comes to enrollment in health plans, 2017 should be included with the 2013-2016 policy stability years because decisions about workplace health benefits and private health insurance coverage offered through the public marketplace were made long before the 2016 election. As can be seen from Figure 5, growth rates in HSA-eligible health plan enrollment have been trending down across most of the surveys examined in this paper over all of the distinct policy periods.

 

 

 

The EBRI report, “Has Enrollment in HSA-Eligible Health Plans Stalled?” is published as the February 2018 EBRI Issue Brief, and is available online here.
The Employee Benefit Research Institute is a private, nonpartisan, nonprofit research institute based in Washington, DC, that focuses on health, savings, retirement, and financial security issues. EBRI does not lobby and does not take policy positions. The work of EBRI is made possible by funding from its members and sponsors, which include a broad range of public, private, for-profit and nonprofit organizations. For more information go to www.ebri.org or visit the web site of EBRI’s affiliated American Savings Education Council at www.asec.org