Health Savings Account - History

History

HSAs were established as part of the Medicare Prescription Drug, Improvement, and Modernization Act which was signed into law by President George W. Bush on December 8, 2003. They were developed to replace the Medical Savings Account system.

A survey of employers published by the Kaiser Family Foundation in September 2008 found that 8% of covered workers were enrolled in a consumer-driven health plan (including both HSAs and Health Reimbursement Accounts), up from 4% in 2006. The study found that roughly 10 percent of firms offered such plans to their workers. Large firms were more likely to offer a high-deductible plan (18%), but enrollment was higher in small firms (8% of covered workers, versus 4% in larger firms). As of 2012, these numbers had increased. Approximately 31% of firms offering health insurance offered an HSA (26%) or and HRA (5%) option. Large firms (38%) were somewhat more likely than small (31%) firms to offer such options. 11% of covered workers were in HSAs, while 8% were in HRAs. In small companies, 24% were in HDHPs vs 17% in larger firms.

A survey of health insurers performed by America’s Health Insurance Plans (AHIP) found that 4.5 million Americans were covered by HSA-qualified health plans as of January 2007. Of those, 3.4 million were covered through employer-sponsored plans, and 1.1 million were covered by individually purchased HSA-qualified plans. This represented an increase of 1.3 million since January 2006. In the individual market, 25% of new purchasers bought HSA-qualified plans. HSA-qualified plans represented 17% of new policies sold in the small group market and 8% of new policies sold in the large group market. A follow-up survey by AHIP reported that the number of Americans covered by HSA-qualified plans had grown to 6.1 million as of January 2008 (4.6 million through employer-sponsored plans and 1.5 million covered by individually purchased HSA-qualified plans). HSA-qualified plans represented 27% of new purchases in the individual market, 31% of new enrollment in the small group market and 6% of new enrollment in the large group market.

In January 2008, market research firm Celent moderated its earlier projections, citing the HSA market's "disappointing early showing", and projected 12.5 million accounts by 2012. A survey published by AHIP in May 2009 found that 8 million people were covered by HSA/High-Deductible health plans in January 2009. Of those, 1.8 million were covered by individual policies and approximately 6.2 million were covered by a group plan.

The Government Accountability Office (GAO) reported in April 2008 that many individuals enrolled in HSA-qualified health plans did not open tax-qualified HSA accounts, and individuals that had HSA accounts had higher incomes than others. According to the report, nationally representative surveys conducted by Blue Cross Blue Shield Association in 2005 to 2007 found that 42 to 49 percent of HSA-eligible plan enrollees did not open HSAs in those years. Based on an examination of Internal Revenue Service (IRS) data, GAO found that tax filers who reported HSA account activity had higher average incomes than other tax filers. Contributions into HSA accounts ($754 million in 2005) were roughly double withdrawals from the accounts ($366 million). Average contributions were also roughly twice average withdrawals ($2,100 versus $1,000). 41% of tax filers who made an HSA contribution did not make any withdrawals; 22% withdrew more than they contributed during the year.

Data released in 2012 indicate that the use of HSAs is increasing. America’s Health Insurance Plans (AHIP) reported in May 2012 that the number of HSA/HDHP accounts more than doubled between January 2008 to January 2012 (going from 6.1 million to 13.5 million). The split between group and individual plans was 11 million vs. 2.5 million, and the gender distribution of HSAs between male and female enrollees was an even 50%. Among individual plan holders, 51% were under age 40, and 49% were age 40 or over. The top five states with HSA/HDHP enrollment were California (1 million), Texas (0.76 million), Illinois (0.72 million), Ohio (0.66 million) and Florida (0.54 million). Also, a survey released in February 2012 by J. P. Morgan Chase of the 900,000 HSAs that it manages indicates that contributions to HSAs have been steadily increasing. Between 2009 and 2011, the average Chase HSA balance rose by 11% annually, and the average employee contributions increased by 7% in 2011. Also, in 2011, 42% more dollars were transferred from HSA cash into HSA investment accounts than were transferred out.