A look at the health savings accounts trend.

Employers and employees alike are always seeking ways to limit their costs. They also want to make informed decisions. Proficiency at addressing both these concerns is critical as the health care delivery arena changes.

With the passage of the Medicare Prescription Drug, Improvement & Modernization Act in December 2003, Health Savings Accounts (HSAs) became available for both group medical programs and the private consumer.

HSAs are tax-advantaged personal savings or investment accounts paired with high-deductible health plans and are intended for payment of qualified medical expenses. HSAa can only be established in combination with high-deductible health plans with minimum deductibles of $1,000/Individual & $2,000/Families.

An HSA health care plan is unique not only from a cost containment standpoint (due to low premium) but because it allows the insured to accumulate or roll over tax-free funds from year to year that may be used to offset future health care expenses. These tax-free dollars may be used to fund other medical expenses such as Long-Term Care and Medicare premiums, to name a few. HSA Plans often have features such as interest-earning savings accounts, debit cards and an array of several technological services that help consumers maximize their dollars.

Some attractive economic features include Catch-Up contributions for people ages 55 or older and Group HSA Programs have a portability provision that allows employees to own and control the accounts even if they change jobs.

Additional advantages for employers to consider offering a Group HSA Program are:

* They reduce spending and slow the rising cost of health plan benefits

* Contributions are tax-exempt for employers

* Reduced health insurance rates with a more affordable program for employees

* No employer accounting liability or reimbursement process

* Encourages savings for future medical expenses; no "use it or lose it" rule

The advent of the Health Savings Account plan puts more responsibility for health care purchases in the hands of the insured, giving them more choices--from selecting providers to choosing prescription drugs.

Many health policy analysts believe making consumers aware of the actual cost of health services will change the relationship between the consumer and physician. Once consumers have more direct control of payment for their health care services, they will be more inclined to shop quite seriously for those services which could impact the cost of care and resulting patient satisfaction.

Having the choice of limiting expenses and increasing decision-making power with regard to health care expenditures is an option that can be a very viable and attractive choice for many consumers today.

Annette Allen, LUTCF, if the Principal of Wellington Newport, LLC located in Southern California. She has more than 20 years of benefits expertise at some of the nation's leading brokerage firms. She is located in Glendale, California and can be reached at [phone].