For sure, HSA's are not for everyone, but I believe almost everyone, if given enough information presented in the right way, will buy the HDHP/HSA concept.
Around 90% of my client base have HDHP's. Most, but not all, are HSA qualified. Quite a few have the Humana Monogram or Golden Rule Plan 100.
Very few buy copay plans. . . once they understand what they get for their premium dollar.
Auto insurance policies don't have copays for tires, brakes and wipers. Why do health insurance policies have copays for routine items such as doc visits and Rx?
I have good relationships with some of the top health insurance carriers and almost everyone of them say they want to sell more HDHP's but their brokers are resistant, ineffective in presenting the idea, or both.
When I talk with agents who don't sell HDHP's the response is almost always the same.
My clients don't want to buy HDHP's.
Neither do mine . . . initially.
The difference is, my clients don't like spending money they don't have on benefits they rarely, if ever, use.
Agents call me on a regular basis and ask how I do it. I always take the time to walk them thru a presentation. Sometimes I spend an hour or more on the phone, answering their questions, giving them insight into the HDHP buyer perspective.
In the end, almost every one of them tell me they could never do what I do. I wonder why?
Why would anyone purchase an HDHP (I assume that means high deductible health plan) that is NOT HSA qualified?
Is there ever an advantage to do that?
I sell very few under 65 health plans and of the few I do 100% have been HSAs and 100% have fully funded the savings account when they establish the policy.
Sold a PPO plan to a referral a few days ago - HSA with almost a matching OOP was a whopping $30 less.
Savings use to be worth it - in many case that's no longer the case.
$5,800 HSA at say $300 per month
Premiums: $3,600
Total possible medical costs: $5,800
Total possible expense: $9,400
$2,500 PPO with 2,000 OOP at $400 per month
Premium: $4,800
Then there's a lot of X factors. The premium savings is $1,200 per year - so if they spent more than $1,200 on a HSA they've saved nothing.
Of course we have the "deductible X 2" argument...however that argument is a tough sell.
Let's also be real. Most of our clients (most, not all) struggle to pay their premiums and I'd love to see a study that tracks account funding.
One trip to a specialist can negate all HSA savings. For example, Aetna covers in-office testing at the copay. So a visit to a cardiologist, that would have been a $30 copay can easily turn into a $1,500 bill - even after repricing.
Not to say HSAs don't have their place, but it's a proper fit for less than 50% of my clients.
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Why would anyone purchase an HDHP (I assume that means high deductible health plan) that is NOT HSA qualified?
Depends on how the numbers shake out.
Two yrs ago GR was very competitive here. Their HDHP/HSA was tops but Plan 100 slightly less.
About half my clients opted for the Plan 100 with a $2500 SIR vs the HSA 100 with a comparable premium but a $5600 deductible.
Now their Plan 100 is still used, mostly when someone wants maternity but it is almost impossible to suggest the HSA.
If they are trying to hit a price point, often the Monogram makes financial sense.
Ran rates for a family of 4. The Aetna HDHP 3000 is $396; the 5000 is $320. GR HSA 100 with a $5800 SIR is $341 and $368 for the $7500 family SIR.
H1 rates for $5k family HDHP are $377 and $307 for the $7k SIR.
Monogram is $169.
Sure, there is more exposure but still it is a decent plan and it hit their price point.
I have several clients that have been hit by the economic downturn. They are looking to save money any way they can but don't want to go completely naked.
Monogram is still a fit and will protect their assets.
FWIW I still see incentives to offer the HDHP vs a copay plan, especially with families.
Using the same family as above and targeting the OOP as close as possible to a corresponding limit on the HDHP and the following numbers come up.
Aetna PPO 2500 is $558.
GR Copay Select 2500 is $654.
Humana Portrait 2500 is $429.
Even with the low price point for Portrait, I could still make a case for the HDHP and let them decide.
As it turns out, the Monogram freed up the most cash on a monthly basis without leaving them out in the cold.
It's no wonder HSAs never picked up the steam predicted. Let's review the premise:
You still pay a relatively high premiums, oh - you also pay for 100% of your expenses - then just when you've paid thousands of dollar per year out of your pocket it's January and everything resets.
$5,800 HSA at say $300 per month
Premiums: $3,600
Total possible medical costs: $5,800
Total possible expense: $9,400
$2,500 PPO with 2,000 OOP at $400 per month
Premium: $4,800
Then there's a lot of X factors. The premium savings is $1,200 per year - so if they spent more than $1,200 on a HSA they've saved nothing.
If they spend more than $1200 in OOP medical under the HSA, how much more will they spend under a typical copay plan?
Usually quite a bit.
You did not identify either plan by name or carrier, but most copay plans require the pt to pay $30 - $40 for a doc visit.
Under the HSA (at least in my area) a doc visit (absent a copay) is $50 - $60.
Lab fees are usually not covered under most copay plans in my area but accumulate toward the deductible so that is a wash.
Rx copays are available, but with most plans, only after you hit a separate Rx deductible of $250 - $500. So unless you are taking a lot of meds, or something very expensive, you won't get the benefit of the Rx copay either.
I have looked at this several ways and in most cases, the HDHP makes sense for folks who don't use their plan a lot and for those who develop a serious health issue after the policy is issued.
It is those folks in the middle for whom it is a toss up.
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just when you've paid thousands of dollar per year out of your pocket it's January and everything resets
Same happens for copay plans.
What was your argument?
Last edited by somarco : 10-23-2008 at 09:44 AM.
Reason: Automerged Doublepost
My argument is this - people don't want a lesson in calculus to buy health insurance; "No, Tom - you forgot to carrier the 2 and add it back to the premium and...."
Copay plans are still very "sell-able" and affordable. While that remains the case, HSAs will only be a proper fit for some of my clients.
Aetna covers in-office testing at the copay. So a visit to a cardiologist, that would have been a $30 copay can easily turn into a $1,500 bill - even after repricing.
Plans vary by state as we all know, but I have serious doubts that Aetna, or any other carrier, will cover a $1500 test for a $30 copay.
One qualification. KP has a plan with no deductibles or coinsurance. Everything is a copay. MRI, $500. CT scan, $500. Colonoscopy, $500.
Great plan as long as money is no object.
Other than that, I have not seen any plan with unlimited tests for just an office visit copay.
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people don't want a lesson in calculus to buy health insurance
I agree.
HSAs will only be a proper fit for some of my clients.
I don't know your clients, but I assume you do.
I have always gone against the trend, a maverick if you will, and the result is a niche market with little competition.
It works for me and I am glad other agents are still out there peddling the same old stuff. Makes my job much easier.
Last edited by somarco : 10-23-2008 at 10:20 AM.
Reason: Automerged Doublepost
New BCBSA Survey Finds CDHP Consumers are More Health and Cost Conscious: People enrolled in consumer directed health plans (CDHP) are more likely to budget for healthcare costs and participate in health and wellness programs, ...
The majority of my Individual sales right now are HSA plans.
I am seeing any where form 37%-44% savings from a traditional co pay plan with a $1,000 deductible.
There are some traditional copay plans that have carved down benefits that are very close into the same premium. Plans that do away with Brand name drugs and have a max of 3 office visits a year have reduced their premiums to the level of the HSA's.
Most of the individual HSA's I am selling have a $3,000 single deductible and the savings from the $1,000 traditional co pay plan is about $3,000 a year. So its really an easy sale.
Especially since the plans I am selling cover wellness 100% up front.
I will say this that the Group HSA's compared to high deductible co pay plans is a much tougher sale.
Group HSA pricing is not where individual pricing is . . . at least not in my area.
Most of my individual clients have HDHP's.
All of my group clients have copay plans.
Obviously someone is wrong on this. Can't say if it is the group actuary or the individual actuary. They should be looking at the same data.
What I am hearing from under writers is that they are combining HSA & traditional plans in the same block for renewals. So there is no real distinction on how the group HSA business is running.
I have had a real hard time with my group HSA renewals. In fact I have had to move some of the business back to traditional plans. There might be a conspiracy with the carriers not wanting the group HSA market to really take off.
combining HSA & traditional plans in the same block for renewals. So there is no real distinction on how the group HSA business is running.
There is probably a lot of validity to that. Add in the fact that the HSA is relatively new for the small group product, so very little statistical data to observe.
Even more so when the data is not parsed.
Carriers can do some incredibly stupid things. They have access to a world of data, internal and otherwise, yet they would rather take the easy road and just assume they are right and the world around them is wrong.
When you talk with underwriters & actuaries who specialize in self funded medical, you get an idea that they really understand the market. Fully insured carriers, particularly those who operate in the under 300 life market, really have no clue.
Carriers can do some incredibly stupid things. They have access to a world of data, internal and otherwise, yet they would rather take the easy road and just assume they are right and the world around them is wrong.
When you talk with underwriters & actuaries who specialize in self funded medical, you get an idea that they really understand the market. Fully insured carriers, particularly those who operate in the under 300 life market, really have no clue.
Not quite following your argument, probably, because all of my HSA accounts are either single family or List bill agreements. In fact, I just added a $700+ premium to a list bill account today.
Can you explain what you meant by the life market<300 Uw having no clue?
Fully insured carriers, particularly those that market mostly or exclusively to employers with fewer than 300 lives have no idea how to parse the data and apply tier rating. They usually segregate the under 50 market from the rest and block underwrite.
They fail to account for differences in plan design (as indicated by ABC) or even segregate by industry. All cases from 50 - 300 lives written in the first quarter of 2007 are showing a PLR of 105% so all cases in that block will receive X% rate increase at renewal. They may temper some of the renewals a bit based on past or ongoing claims, but for the most part they treat all those groups as being equal.
The intelligent thing to do is to at least apply tier rating on renewals and give greater or lesser increases to the higher/lower loss ratio groups.
Almost no one does that.
If they were to look at the HRA/HSA block separately from the copay plans my guess is they would see more favorable loss ratio's and lower admin costs (less claim frequency) than on the copay plans.
Are HSA's Undersold?
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