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A Publication of WTVP

America's Health Insurance Plans (AHIP), the national association representing nearly 1,300 member companies providing health insurance coverage to more than 200 million Americans, retained Public Opinion Strategies (POS) in 2004 to better assess the awareness of consumer-driven health care plans among consumers, small business owners, senior employee benefit executives in larger businesses, and primary care physicians. Of the 10 key findings, probably the most significant was "consumer choice is here, and it's going to be growing in influence soon." POS found 12 percent of larger companies offer consumer choice plans, 13 percent more plan to offer such in 2005, and over the following five years, another 27 percent plan to offer consumer choice plans.

Once one cuts through all the fog and generalization contained in most articles and studies about "consumer-driven" health benefit plans, one will eventually learn there are only a handful of structures that allow an employee to pay his or her out-of-pocket health care costs with pre-tax dollars. These are the structures around which most "consumer-driven" health benefit plans are built or can be built, and they include:

  • Health Savings Accounts (HSAs).
  • Health Reimbursement Accounts (HRAs).
  • Archer Medical Savings Accounts (MSAs).
  • Section 125 Flexible Spending Accounts (FSAs).

The AHIP has developed a very informative matrix that compares these four options addressing 12 pertinent questions: Who's eligible to set up an account? What are the requirements for the corresponding health plan? Who may contribute to the account? What are the limits on contributions? What are qualified medical expenses? When can funds be used to pay health insurance premiums? Can funds be used to pay for long-term coverage? Are withdrawals for non-medical expenses allowed? What's the tax treatment of contributions? Can funds be carried over from one year to the next? Are accounts portable? Does interest accrue on funds deposited in the account? You can access this informative matrix at http:// www.ahip.org/content/ pressrelease.aspx?docid=7303.

Additionally, the AHIP matrix includes an informative overview of each health benefit plan:

Employers soon will be approached by many health insurance plans offering new consumer-choice options to accommodate this groundswell of support. With the information from the AHIP matrix, at least you'll understand the acronyms being used and the parameters of these pre-tax deals. A word of caution, though: the rules applicable to these tax favored accounts are complex, and employers shouldn't adopt or modify them without advice of qualified tax and ERISA counsel. IBI

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