Copays vs. HSA's....LEt's Get it ON!!!!!!!!!

[J.R.]

Can you explain something to me? In the original post you stated that HSAs are good if you go to the doctor morei than 119 times per year. Where are you getting this figure?

I would be happy to explain. I use a ROI formula to show people the pros/cons of having a plan with/with out copays. The 120 doctor visit was part joke/part calculation. An illustration will help.

Family of 4 goes to the doctor a total of 8 times in both scenarios.

Current Plan:
$400 monthly premium + $35 co pay to see the doctor (annual premium = $4800)
$2000 deductible +$1250 coinsurance (2 deductible per family)= $6500 OOPM + copays .
8 visits to doctor = $280
Total Exposure = OOPM + Monthly Premiums + Copays = $11,580 for a bad year.

New Plan: $200 monthly premium, no copays, ( annual premium = $2400)
$5700 OOPM one deductible plan.
8 visits to doctor @ $60 (average repriced amount) = $480
Total Exposure = $8580


Savings w/ new plan = $800 in exposure on OOPM, $2400 in savings on annual premium.
Total Savings = $3000 + $800 = $3800
Doctor visits needed to break even with copay plan= 152 visits (total savings / $25 savings per visit).

Does the illustratoin make sense to you?

Some agents use monthly savings and calculate things in that way....or the difference of a copay versus none or the total exposure. In this case, the client is savings $25 per visit by having the copay plan, but is paying an additional $2400 a year for that privilege. You can just use that to show a return to equal 96 visits alone which gets the point across. I prefer to use every number at my disposal to proof my point and get the client thinking. I want them to think about their total exposure especially for accidents! How many times they go to to doctor, what they pay for health care costs, etc. because things boil down to economics and IMHO it is all about ROI and the risk associated with that.

Agent: "You're Son breaks his leg playing baseballl and goes to the emergency room. Would you rather pay $1500 or $100????"
Client:"Well, duh, I rather pay $100."
Agent: GREAT, you're going to love this then. Say that bill was $3250 and you had to pay that because surgery was needed on your sons leg, but you were smart enough to listen to me and had an accident policy in force. Now you only owe $100 on your plan vs. the full $3250 you would have had to pay for the plan you have now."
Client: "Where do I sign"
Agent:

Case closed, end of story. Once you put together a spreadsheet that you can quickly modify as needed. It is simply a matter of showing the client the numbers and let them speak for themselves. We, as agents, hope that logic will dictate the ultimate chioce, but we also know as sales professionals that emotions always lead first! The choice is always up to the client, but I feel it is ALWAYS important to look at every angle.


Hope this helps.....

-J.R.

 

[somarco]

And there you have it. The inner workings of the female mind.

Think like a man, then take away reason & accountability . . .

$300 a month. I love group coverage.

Actually, what you love is for someone else to pay 70% of the premium for you

 

[somarco]

I liked it because it has a conversion available after COBRA

Actually, most states require carriers to offer conversion.

I must presume you have not priced conversion vs. the benefits. Conversion plans I have seen are double+ COBRA rates.

 

[bluemarlin08]

Who offers quality accident policies?

 

[SME]

Actually, most states require carriers to offer conversion.

I must presume you have not priced conversion vs. the benefits. Conversion plans I have seen are double+ COBRA rates.

When your on the auto declination list for every carrier, having a national carrier that you can convert with if necessary is a necessity. And yes I like having someone else pay for my coverage. This is actually the first time my coverage hasn't been free. But since my husband works for a Department of Defense contractor technically you're paying for my health insurance.

(Sometimes it can be easy to forget that for some of us group coverage is the only option.)

 

[aufan]

While i'm definetely no expert on the female mind, I would have to say that this thread really exposes the differences.

Here's the deal. You can show the breakdown on paper till you're blue in the face. Even in the wildest chance the wife gets it...if they don't fund the savings account then the first time she takes the kids to the doctor and pays EVERYTHING out of pocket along with the meds she needs...she's on the internet looking for quotes for a copay plan.

I love the HSA...i get it. However, most people don't and on top of that you can't make them contribute to their account. Even if you set the contribution to the account on bank draft there is no guarantee they'll continue to do so.

So what's the answer? I've changed my tactics so many times it's scary. But here's what's been working for me:

"Mrs. Jones....are you looking for a plan with bells and whistles or are you looking for a plan with 100% coverage after the deductible?" I briefly explain how the HSA differs from a traditional copay plan and if i sense she doesn't get it (it's usually very easy to tell) then I'm back to the copay plan at a premium she can live with. It's about finding products that fit customer needs, wants and budget.

 

[newmindfashion]

My HSA approach

Maybe women in CT are really sharp because they get it here. And, my persistency is very good with HSAs and not as good with the copay plans. I think that has to do with expense. Here's what I do:

I don't even talk about the actual HSA part at all in the beginning. I explain the concept of the combined family deductble and then compare the price of the HSA compatible plan to that of a good copay plan (not one where testing and ER goes to ded., I mean a good copay plan). In many many instances, the premium gap more than pays for the family deductible. Then, I sweeten the proposal by pointing out any of the following features, depending on the HSA being explained:

*Some HSAs have extensive upfront preventative care.
*Assurant has Secure Solutions which can eliminate almost the whole family deductible.
*Most HSAs have tremendous discounts within the network (UHC for example)

Only when the client sees the light fom a coverage standpoint do I bring the actual Health Savings Account into the picture. It goes something like this:

"And.....since you are eligible to establish an HSA with this health insurance plan, all of your out-of-pocket medical expenses toward your deductible and other expenses such as vision and dental can be paid for with pre-tax dollars if you use the HSA to pay for expenses."

Basically, the customer is re-routing funds from one account to another and then getting an above the line tax write off. They are spending no more than they would have spent on the out-of-pocket towards the deductible anyway. Except, by channeling the money through the HSA, the costs are tax free. The premium difference between the HSA compatible plan and the richer copay plan has already paid for the deductible that year. The HSA is pure gravy and should be explained after the insurance component makes sense.

In summary:

*(1) HSAs versus multiple ded. copay plans or rich HMOs.
*(2) Premium difference pays all or most of the HSA deductible.
*(3) Then stress what upfront features the HSA plan does have to lessen the edge of the high deductibe, whether its preventative care, accident coverage or just very good discounts on the way up to the family deductible.
*(4) After the above is understood, then unveil the optional account aspect of the HSA compatible plans and the pre-tax implications.

Love HSAs. Cost effective, simple for women and men. No difference.

 

[trvlnut]

Newmind:
Love you explanation. I have found that when I bring up the HSA, people just stare at me. Too complicated. I think your method is much simpler. Save the complicated stuff til after the insurance.

One thing that I have been thinking about is that people in our country don't save. I don't see how an HSA plan is best for those who don't fund an HSA and spend all their $. They'll end up going into debt paying their deductible. Seems like a better bet for those who can't or won't save to put them in a copay plan.

 

[somarco]

I don't see how an HSA plan is best for those who don't fund an HSA and spend all their $. They'll end up going into debt paying their deductible. Seems like a better bet for those who can't or won't save to put them in a copay plan.

Art Williams made a similar argument in his BTID manifesto.

Problem is, most folks bought the term & spent the difference then when their 10 year overpriced term ran out some found they could no longer qualify for insurance at any price AND . . . they still had a need for life insurance.

Last figures I saw indicated that fewer than 20% actually FUND their HSA and only 3 - 4% fund it to the max. The rest had less than $1000 in the HSA.

I show people a way to maximize their dollars and get the most bang for their buck in health insurance. If they choose to piss away their HSA dollars and fail to take advantage of the repricing of provider services then there is nothing I can do to save them from themselves.

 

[newmindfashion]

HSA still makes sense even if they can't afford to fund it

Trvlnut,
Thanx for the compliment. The HSA is still better.

Keep in mind that if you sell them a standard PPO copay plan. They're still going to owe back a deductible and coinsurance anyway! With an HSA 3K family ded. for exmaple, if they end up owing the deductible without having any money in the HSA and have to pay it back in small amounts, they simply send the amount they can afford to pay backto the HSA first, then use the amount in the HSA to pay off whatever amount they can afford to pay the providers up to the point 3K deductible (using that deductible example). Its no different than if they have to hit their major medical deductible on the standard copay plan which has an absurd multiple deductible scenario that the client will still have to pay back and will not likely have saved for in advance. With the HSA, what they can afford to pay back is automatically tax free whereas the Standard PPO with a 2K ded. w/ 80/20 coinsurance may not be tax free unless the client can prove that to be 7.5% of their income if they itemize on their tax return.

The point is still the same. Sell the HSA on the simplified major medical concept. Family can only owe the amount of the family deductible and then their done. Your customer is still going to owe a lot of money on most PPO copay plans anyway. How are they helping? Because they have a $20 office visit fee? Aren't your clients who haven't saved still going to owe a lot of cash on most low cost copay plans?

Even if the client can't fund it, its still better because the customer can fund the HSA little by little as their able to and then pay back the deductible in small increments just as they would on a standard copay plan except now they have an automatic tax mechanism in their favor as long as what they do pay is channelled through the HSA.

I even sell HSAs to people who don't establish an HSA at all. Reason? THE HSA COMPATIBLE HEALTH POLICIES SIMPLY MAKE MORE SENSE IN MOST CASES AND ARE JUST MORE COST EFFECTIVE REGARDLESS OF WHETHER THE CLIENT CAN OR DOES TAKE ADVANTAGE OF THE HSA ITSELF.