posted on:  4/11/2007     revised: 3/9/2010

I have been an active promoter of health savings accounts when they are appropriately used as an option in an employer-provided health plan¹. I have been equally opposed to massive replacement of traditional health plans with HSAs². HSAs should never be forced on people as the only health plan option. Health savings accounts are not appropriate for everyone and were never endorsed as a panacea for the masses. Yet in a growing number of cases, HSAs are the only option offered through employer health plans. As a result, there are a growing number of examples of financial disasters for individuals stuck in this situation.

The following are based on real-life inquiries to the OnlineAdviser service but I modified the names and facts just enough to ensure privacy:

Federal Employees Lose HMO option

Jim, a federal employee, had an HMO for himself and his four children. Beginning January 1, 2007, the HMO was no longer available and he switched to a HSA plan with a $5000 family deductible. In the second week of the year, one of his children needed emergency foot surgery. The family was unprepared for the extra $5,000 bill right after the holiday season. There had been no opportunity to deposit any amount  in the Health Savings Account. Now, ninety days after the medical procedure, the foot is healed but the family is hounded by bill collectors hired by the hospital and various medical service providers. The unpaid bills have been reported to the credit bureaus causing a reduction in the parent's credit score. This means he will eventually have to pay higher mortgage interest costs, higher insurance rates and may be denied financial opportunities that are available to those with a higher credit score. His security clearance could even be at risk.

Anthem Employees Grumble About Health Coverage

Anthem was an innovator in the development of consumer-driven health plans that allow individuals to choose from a wide range of health benefits. Surprisingly, Aetna employees actually have little choice in their selection of health plans. This national leader in managed care does not offer an HMO or full coverage PPO managed care plan to its own employees. Instead, employees must choose between a variety of high deductible HRA and HSA plans.

Even more surprising was the level of discontent about health benefits. Granted, my impression of Anthem employees' take on their health benefits was formed in an unscientific manner based on only a small number of employees, but dissatisfaction with the forced high deductible and HSA-type health plans appears be widespread among Anthem employees. If Anthem can't keep its own employees happy, how will it do with its insurance clients? Surely Anthem knows that maintaining a high level of satisfaction among its insured members is crucial to a health plan's long term success.

I learned about the problem when one Anthem employee asked why the employer-provided coverage did not seem like a better deal than he was able to find online at Freedom Benefits without any financial support from the employer. There is simply no good answer. I believe that if Anthem wanted to do better in terms of providing health plans that employees actually like, it surely could.

The morale of these stories is the same: Forcing HSAs on employees is a clearly a path to disaster for any employee benefits department. Let this be a prediction: within a few years, employee pressure will force motivate organizations to offer a wider choice of benefits and the people that promoted a "one size fits all" will be looking for new jobs.

keywords:   HSA, health savings account, Tax Increase Prevention and Reconciliation Act , health care reform

related topics:

1 The basics of Health Savings Account are explained at http://www.healthsavingsaccount-hsa.com

² A CD recording of a program I gave focusing on the efficient use of Health Savings Accounts in an employer health plan is available at http://www.nationalseminarstraining.com/RockhurstConferences/ProductGeneratorAC.cfm?pc=24363

Copyright 2010 by Tony Novak. Originally produced and published for the "AskTony" column syndication prior to 2007. Edited and independently republished by the author in March 2010. All rights reserved.