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House of Representatives
Session of 2019 - 2020 Regular Session


Posted: January 28, 2019 04:09 PM
From: Representative Brett R. Miller
To: All House members
Subject: Establishing Health Savings Accounts and High Deductible Health Plans for State Employees
The soaring cost of state employee compensation poses a threat to Pennsylvania’s financial stability. This is illustrated by the contrast in the moderate rise in average employee salary from $43,112 to $55,452, or 29% from 2002-03 to 2016-17. But, over the same time period, the average per employee total benefits costs rose drastically from $13,328 to $44,635, or an astounding 235%. Put another way, benefits as a percent of salary increased from 31% to 81% due, in part, to the increases in health care costs which now comprise 48% of total employee benefits.

To control the cost of these health programs this legislation directs the Office of Administration to create a Health Savings Account program (HSA) with a qualifying State-sponsored, High Deductible Health Plan (HDHP) that will be offered in addition to the traditional health plans. Participation in the HSA/HDHP will be optional and the cost of the new plan cannot exceed the cost of the traditional health plans.

HSA/HDHP’s have the potential to be a win-win situation for the state and for state employees.

Advantages to the state include:
1) Lower costs to the state. (The amount of savings will be dependent on the plan design and how many employees enroll, but states that have implemented an HSA/HDHP have experienced cost savings).
2) Increased ability to recruit and retain employees from the private sector, where this type of plan is growing in popularity.

Advantages to employees include:
1) Employees have more choice and control over their healthcare needs.
2) Unused money in an employee’s HSA tax-free account are not forfeited at the end of the year and continue to accrue earnings tax-free. Withdraws are also tax-free if used for medical expenses. At age 65, withdrawals for non-medical purposes are taxed but do not incur a penalty; however, withdraws for medical expenses like long-term care or Medicare premiums are still tax-free.
3) The design of the HSA/HDHP empowers employees in their health care decisions and incentivizes healthier lifestyle and healthcare service choices resulting in real, measurable improvements in health habits and outcomes.

The growing use and popularity of HSA/HDHP’s is shown by the fact that 30 states have adopted these types of plans. In addition, many counties, municipal governments, businesses and corporations already have or are switching to HSA/HDHP’s to save money and provide additional options for employees.

Please join me in co-sponsoring this bill to create an optional Health Savings Account / High Deductible Health Plan for state employees.

Introduced as HB1357