Do HSAs Improve Collections?

Wed, 19 Jul 2017 13:00:54 +0000

The goal of Health Savings Accounts (HSAs) is for individuals and families to be able to save for, and pay for, healthcare expenditures. While HSAs do offer many benefits for self-pay patients in terms of pre-tax and tax-deductible contributions, in addition to tax-free withdrawals or earnings, the collections aspect of HSAs can present some issues for both self-pay patients and hospitals.

Increased Costs for Patients

In some cases, a HSA may result in higher costs for some medical services for certain patient groups. If a patient has not been funding their HSA, or has been funding a smaller amount, they may have to pay more out-of-pocket because of higher deductibles. HSAs tend to benefit those that pay more in insurance premiums than they do in actual health care.

What About Increased Healthcare Costs?

One downfall of HSAs is that they do not account for the rising cost of healthcare. A self-pay patient’s healthcare could exceed what they actually anticipated. If there is not enough money in their HSA account to cover what the patient expected, the patient may not be able to pay for the medical care. The high-deductible of HSAs might be out of reach for lower income families who might not have enough of a cushion to cover unexpected medical incidents.

HSAs might even cause a shift of costs in the healthcare industry. If healthier people choose to insure with HSAs and non-healthy individuals stay with traditional plans, the risk factor in the traditional plans could change. This, in turn, would increase premiums for employers and patients with traditional plans. The real impact of HSAs is not as apparent as just the rates themselves.

HSAs and Hospitals

Hospitals have different concerns when it comes to HSAs in terms of financial ramifications. Some claim that HSAs could increase their accounts receivable. If hospitals do not manage their HSA’s promptly and correctly, they will have to reconcile accounting or non-payment issues in the future. Therefore, obtaining information on a patient’s insurance coverage under a HSA is important.

Collection on HSAs: Billing Transparency is Key

It is highly recommended that hospitals be proactive in dealing with self-pay patients. Hospital staff should get into the practice of letting patients know as soon as possible what they are expected to pay for the best chance on collecting on HSA patients. At the same time, hospitals need to educate self-pay patients as to exactly what they charge for common procedures and surgeries. Patients in high-deductible plans will know exactly who they will have to pay, whether it be a co-payment or actual claim.

In order to make payments easier, hospitals may also consider getting permission from patients to deduct directly from their HSA debit cards to eliminate the need to mail bills, especially in the case where charges are not known right away.

By explaining to self-pay HSA patients the amount that will be due for payment, hospitals can increase their collection rates for this patient population. Pricing transparency, when available, and better patient communication is key when dealing with HSA patients.

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Will Health Savings Accounts Replace Traditional Insurance?

Wed, 17 May 2017 10:09:06 +0000

With more and more people turning to Health Savings Accounts (HSAs) to cover their medical expenses, what does this mean for the state of healthcare and traditional insurance in the near future?

Impact of Health Savings Accounts on Traditional Insurance

If Obamacare were to be repealed and replaced, several groups are likely to find themselves paying higher premiums. Some of the affected groups could include senior citizens, low income earners, and those with preexisting conditions.

HSAs have been around since 2004 after President Bush signed the Medicare Prescription Drug Improvement and Modernization Act of 2003. HSAs are tax free financial accounts that allow you to pay for medical expenses, and you can build retirement savings that can be accessed at any time without penalties after you attain the age 65.

Previously, Health Saving Accounts were allowed only for those with a high deductible healthcare plan. The minimum annual deductible required by the old plan depended on whether you have single coverage or family coverage. The intention was to provide a way for individuals or families to get a tax waiver and be able to pay for their care with their savings.

HSAs Under the New Healthcare Plan

As the new healthcare plan continues to unfold, the details of what could happen to HSAs are not very clear. However, the indication from Republicans—who have been pushing for new healthcare legislation— is that there will be broad changes to HSAs and some legislators are looking to make it a part of US healthcare.

Proponents of the new healthcare plan want to expand HSAs so that Americans can pay for their own care through these types of accounts. The architects of the new healthcare plan believe that it will complement the new tax credits that are set to replace Obamacare subsidies.

However, critics are skeptical of how this new plan for HSAs will benefit low income groups. In the past, middle class Americans took advantage of tax exempt HSAs to save for future expenses. However, low income groups hardly have money to spare for this type of saving.

Expansion of HSAs

Health practitioners believe if the goal of HSAs is to act as a replacement of traditional coverage then it must provide overall health care benefits. Currently, HSAs can pay for medical expenses including, deductibles, co-payments, dental care, co-insurance, and any other out of pocket costs.

While you can use HSAs to pay for a wide range of medical expenses, you cannot use it to pay for any medication that was not prescribed by a doctor. Critics feel that for it to be seen as a replacement of traditional coverage, it must also address overall healthcare. For example, supplements may be bought over the counter which may prevent health complications in the future. Another problem is that people tend to avoid getting treatment for what they see as a minor ailment, when they are paying from their pockets.

How Hospitals May React

There are logistical challenges that hospitals will have to overcome as more people opt for HSAs. Hospitals may have to pursue their claims to ensure that the patient complies. This is likely to result in new billing systems to improve collections. Some healthcare providers could respond by offering their own plans.

Clearly things are in flux when it comes to the death of healthcare repeal. As it stands, Health Savings Accounts will not be replacing traditional insurance—but that all could change in the future. How have HSAs affected your billings and collections? Let us know in the comments below.

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