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Ask Greg Milneck why he shifted health care coverage to a high-deductible health savings account three years ago, and his explanation sounds more like a lesson in economics.

His plan covers 10 employees and their families through his business, Digital FX.

“There are tax savings because you’re able to put the deductible into the HSA pre-tax so there are savings there,” Milneck says. “With us being a fairly young group, it made sense. We’re all in good health.”

As HSAs increasingly become an employer alternative to ballooning health care costs, participants like Milneck are recognizing the benefits, especially the tax savings.

They’re also talking more like financial planners. “Pre-tax savings” and “flexibility” have become part of the lexicon as more people shift from higher-end, co-pay plans to strategizing their own medical care, costs and tax benefits through these consumer-driven plans.

“I like it, and we’re debating raising the deductible higher this year,” Milneck says.

The IRS increased the maximum contribution to these accounts to $2,900 for an individual and $5,800 for family coverage. To Milneck, that translates into bigger pre-tax savings that can be rolled over from year to year unless he needs it for medical costs.

“Theoretically, the higher the deductible the better unless you’re just sick,” he says. “The higher your deductible the lower your premium and lower costs, and you’re putting more pre-tax savings in the account.”

At first, Milneck worried he’d made a mistake. It was a shock to pay the entire doctor bill instead of the $25 co-pay, which raises the question of why anyone would want to handle a bigger share of medical expenses.

For him, the fast answer is tax savings. While cost is a factor, he says the move wouldn’t have happened if it had meant fewer benefits.

Blue Cross Blue Shield has offered the plan, Blue Saver, since 2006. Many of its employees use it, including Eileen Wilcox, director of human resources.

“Anyone who puts the numbers to it will see there are benefits,” Wilcox says. “You end up with more money in your pocket as an employee. On the HMO plan, family coverage would be $4,368 a year as opposed to $2,700 for Blue Saver, so that’s $1,668 annual savings just in premiums plus BCBS contributes $2,000 in the account. I can save $3,800 pre-tax in my HSA.”

Blue Saver’s premium is half the price of the PPO [preferred provider organization] plan, and her company contributes to the account.

Wilcox participates in the plan, contributing the maximum allowed, and a little more money is carried over from year to year. She plans to use the account to help cover her medical costs in retirement. It’s also an interest-bearing account set up with a bank, further helping her grow what she saves. A Visa card is issued so participants have 24/7 access to their money and can monitor the account online.

“The plan is especially good for people who want to take charge of their health care, which is why it rolled out at the same time as our employee wellness program,” she says.

Twenty-six percent of Blue Cross Blue Shield employees use the plan, a number Wilcox says is steadily growing as employees tell each other about its benefits.

According to Charles Abboud, manager of employee benefits and financial services at Wright and Percy Insurance, policymakers, health plans and insurance carriers are shifting from managed care to consumer-directed health plans. It is usually a high-deductible plan that can be combined with a tax savings option such as an HSA or health-reimbursement arrangement [HRA]. HSAs are employee-owned so they’re portable; HRAs are not because they are owned by the employer.

“The philosophy surrounding the [consumer-directed health plan] CDHP model is we as consumers must have a stake in health care decisions,” Abboud says. “We must recognize that expenses go far beyond co-pays. That stake is the upfront high deductible. The goal is to introduce true consumerism into health care and improve efficiencies in the system overall.”

More than 23% of Wright and Percy clients use a high-deductible plan for their employees, a number that is growing. Of that number, 25% use the HSA option, which he says has its challenges.

“Employees often lack confidence that they can navigate the system and resolve issues with providers,” he says. “The high deductible itself is a challenge. It is easier to budget for the predictable co-pay. There is sticker shock when you start talking about deductibles of $2,000 to $5,000. There is often not a big financial incentive to go with the HDHP [high-deductible plan], so they don’t change.

“The employee has to be engaged in the process; they track expenses, and review provider billing to make certain they are being charged the discounted rate negotiated by the carrier. This can be frustrating and time consuming.”

Michele Zeber, benefits manager with the LSU System, says it added the HRA, a variation of the HSA that is an employer contribution plan, as a coverage option in 2002. Employees manage the money, which she says has also made them better consumers of medical services.

When the plan was first available, enrollment was 10%. Zeber says that figure now is more than 60%. She attributes the growth to employees telling each other about the plan’s benefits, which include a $5,000 critical-illness direct benefit and a free $10,000 life insurance policy.

The plan’s popularity is no surprise to Zeber.

“I think that people like choice and know they have some control over their lives,” she says. “We have seen that the cost is significantly lower than some of the other plans. We have a reserve in our plan that shows us this is working and the reason why is people know how much it costs to have a prescription filled, to see the doctor or have a test. So they keep the money in case they need for it. They’ve taken ownership of that money.”