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June
2006 Issue
Incomplete Information Continues To Plague HSA Reporting, Muddies Progress Measurement
Among the growing number of reports with incomplete information about HSAs was an article published in mid-June from a San Francisco business magazine and picked up elsewhere.
The main thrust of the article was that HSA account users were not funding their accounts.
Based on Information Strategies, Inc.’s latest survey of more than 3,000 individuals with health insurance and its ongoing contact with 10,000 HSA users, it would appear that individuals are funding their accounts.
Fully 89% reported they had put funds in their HSA accounts and more than half (54%) said they planned to leave funds in the account for retirement and most indicated they would only withdraw for major medical events.
At the same time, the period between obtaining their eligible healthcare insurance and opening a custodial account has shortened to just under 45 days from an average 86 days at this time last year.
Part of the misunderstanding attendant to these reports is the fact that the number of new accounts is growing very rapidly. This results in the perception that there is apparent low numbers reported on funding issues. However, based on ISI’s quarterly survey of banks, almost all accounts are funded to a greater extent than reported in this and other articles. To give this concept some number comparison, as of April 1, 2006, accounts opened before 2006 average $1,866 per account, while overall, the average account is $1,407.
Among the corrections that should be made in the San Francisco business magazine article, was its claim that no numbers were available for first quarter 2006 when, as readers of the Healthcare & You newsletter know, quarterly numbers were reported in May.
The first quarter survey indicates that total HSA custodial deposits reached almost $2.1 billion dollars by March 31st. This represented a jump of $.9 billion from the $1.2 billion dollars in HSA accounts as of the end of 2005.
Deposits from reporting banks averaged $775 per account opened before 2006 (deposits into these accounts averaged more than 6 times those made into new accounts opened in 2006) as depositors made significant contributions in the days leading up to the April 15th tax filing date for the prior year, as well as made contributions for the current year.
With more than 100 banks surveyed, ISI estimates that the total HSA accounts at the end of the quarter were 1.5 million (up from $1.1 million at year end 2005) covering an estimated 3.3 million Americans.
Also quoted in the article was a report by Steve Davis, editor of Inside Consumer- Directed Healthcare. He pointed out to the reporter’s editor that one HSA might cover a family of five lives. This in response to the low estimate in the article of the number of lives covered.
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