2005 brings a new option to the New York marketplace called High Deductible Health Plans (HDHP) and Health Savings Accounts (HSA). As of January 1, 2005 Oxford , United Healthcare and Aetna have developed HDHP plans that meet the qualifications for an employee or employer to contribute to an HSA account. These plans have deductibles that range from $1,100 to $5,000 per single (2x for family) depending on the carrier and type of plan with some plans paying 100% after the deductible and others with co-insurance features. In no instance can the maximum out of pocket in-network be greater then $5,100 per single or $10,200 per family in 2005.

HSA funds accumulate tax-free and are used to offset the cost of the HDHP deductible and co-insurance for qualified medical care. If an individual chooses to pay the deductible or other medical care out of pocket, the money in the HSA account accumulates for future use on a tax advantaged basis. For 2005 the maximum contributions to the HSA account is limited to the lesser of the deductible amount or $2,650 per single and $5,250 per family.

HSA's should be looked at very carefully in combination with HDHP plans. In many instances where community rating is in effect the combination of an HSA with HDHP plans are not necessarily less expensive nor the right combination for a family with young children or chronic illness.

HDHP plans bring back the indemnity concept of insurance which was in place before managed care came into the metropolitan area. When using the HDHP the insured will have a debit card that will be used to deduct the appropriate medical fee from their HSA account. This may cause some confusion when first going to the physician's office, since most are used to receiving a flat dollar co-pay amount. It is also important to note that if the HSA is funded on a monthly basis, it will take time for the initial monies to grow to pay the first dollar coverage.

We feel this new concept will have an impact on our marketplace, especially for the younger employee and those who wish to have another vehicle to invest in tax deferred accounts. In addition, it will offer employers the option of providing a catastrophe type of coverage at a very reduced rate for those employees who do not wish to participate in a full managed care environment.