Health insurers to unveil new products next year

Two major insurers in northeastern Pennsylvania are planning to offer the latest twist in health insurance - health savings accounts, which are seen as one way companies can curb rising costs in the years ahead Blue Cross of Northeastern Pennsylvania and Geisinger Health Plan both expect to offer

The accounts appeal to large businesses that hope to control health spending and to small companies looking for affordable coverage for their workers, said Karen Kaminskas, senior director of market and product development for Blue Cross, based in Wilkes-Barre.

The accounts now carry an added incentive. State legislators voted this year to exempt earnings in the accounts from state income tax.

The move is expected to drain $200,000 from state coffers in the fiscal year ending June 2006 and $300,000 in the following fiscal year, according to Stephanie Weyant, a spokeswoman for the Pennsylvania Department of Revenue.

Established under federal law in December 2003, health savings accounts, or HSAs, are like 401(k) plans for health care. They pair a saving account with a high-deductible, insurance policy.

People withdraw the money in their accounts to pay medical expenses up to an annual deductible. The deductible must be at least $1,000 for individuals and $2,000 for families. Additional expenses are covered by the high-deductible policy.

Contributions to accounts from employers and employees are tax-exempt at the federal level. The contributions can be invested to earn interest.

Both Blue Cross and Geisinger plan to him a bank or other financial provider to handle the account side of the product.

The goal is to give people more control over their health spending and a greater incentive to save. "People will begin to realize the importance of maintaining good health, as well as the cost of medical care," Kaminskas said.

Blue Cross expects demand for HSAs will be slow at the outset, largely because of the high deductibles that accompany them, Kaminskas said. But, she added, "We do anticipate that the demand for it will grow."

At Geisinger, few companies have asked about HSAs, said Amy Bowen, a spokeswoman for the Danville-based insurer. She was unsure what the demand would be in the region. But, she said, HSAs are expected to take off next year.

By 2010, 15 million people - roughly 9 percent of those with health insurance could have HSAs, according to Celent, a research and consulting firm in Boston.

Some of those people could be working at T-R Associates Inc., which pro- , vides computer. technology and export services from its office in Archbald, Lackawanna County

The company employs less than 50 people and has started eyeing HSAs as a healthcare option, said Sandy Russo, T-R's office manager. "It seem like that's going to be the wave of the future," she said.

Health costs rise by double digits every year, Russo said.

HSAs might be a way to avoid future increases yet continue offering the same level of coverage to employees.

"It's very tailored to what a company wants to do," she said.