The Sun News
By Kathleen Vereen Dayton

A year and a half after the government made health savings accounts legal, HSAs are moving into the mainstream as more Americans seek affordable health care coverage.

For Jim and Lenore Bolig, early semi-retirees who moved to Myrtle Beach eight years ago, a health savings account helped them find a more affordable way to foot the bill for their own health insurance.

The Boligs were self-employed for many years, but had a company plan that covered themselves and their employees. Upon retirement, Jim Bolig started shopping around for a new plan.

"To me, this was the best value for the buck," Bolig said.

Health savings accounts are interest-bearing savings plans paired with high-deductible health insurance plans that generally cost much less than lower-deductible plans. Money accumulates in the savings accounts and can be withdrawn tax-free to pay for medical care. If not used, the money accumulates with tax-free interest until retirement.

"I saved $210 a month with this program over what I was paying," Bolig said. "My deductible was better with this program and I was able to contribute tax-free to this. It's just a great option."

HSAs are available through many banks and insurance companies.

Conway National Bank began offering HSAs at the first of the year, said Phil Hucks, bank president.

"We see it as an opportunity for long-term deposits," he said. "With the increase in health care costs, more and more group plans are having to go to a higher deductible. A company can actually put an amount in the health savings account, combined with the high deductible plan, and actually come out at a lower cost health care plan for the employees, with no reduction in benefits or expense to the employee."

Hucks said some see HSAs as another retirement account.

HSAs were signed into law in December 2003 as part of the Medicare Modernization Bill and became available Jan. 1, 2004.

The average cost for all family coverage plans is more than $9,000, according to a health insurance survey by the Kaiser Family Foundation and the Health Research & Education Trust. This is up 44 percent since 1996, according to the federal government.

Golden Rule Insurance Co., a division of United Health Care, has reported that 44 percent of its total sales in South Carolina are HSAs. Golden Rule also reported that its customers, including those in South Carolina, have saved $132 million in their tax-free, interest accruing accounts since January 2004.

HSAs have certain requirements and different insurance companies and banks may offer different deductibles and interest rates.

As a rule, anyone can open an HSA as long as he is not on Medicare and has a high-deductible health insurance plan and is not covered by another health plan.

Ellen Laden, spokeswoman for Golden Rule, said many buying HSA plans are self-employed, or have to buy their own health insurance.

"The second group that's buying them in large numbers is early retirees," Laden said. "Many of these people who are now retiring are in their early 50s. They're baby boomers. These people are having to buy health insurance for the first time and they are surprised to find out how much health insurance costs when they have to buy it for themselves."

Laden said families with several children are the third category becoming interested in HSAs.

"I think the thought was, if consumers have more control over their own health care spending, they will be wiser, better consumers of health care and that will help bring health care spending down," Laden said. "If you have to buy your own health care, you will be in sticker shock, but for most consumers there are solutions in HSAs."

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What is a health savings account?

HSAs are a newer option for health insurance with two parts:

1 | a health insurance policy with a high deductible.

2 | an investment or retirement account from which you can withdraw money tax-free for medical care. Otherwise, the money accumulates with tax-free interest until retirement, when you can withdraw for any purpose and pay normal income taxes.

For more information and a list of insurance companies offering HSAs in South Carolina, visit www.hsainsider.com.

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