A couple questions:

  1. Are you a fan of HSAs?
  2. Are your clients?

From our conversations with agents and brokers across the country, we’ve found that most insurance professionals are big fans of Health Savings Accounts. They understand that an HSA is a great way for people to take control of their healthcare and ensure that they have the funds available for any medical needs that may arise in the future. They also believe that overpaying for insurance is often a mistake and it can be a better solution for some individuals to purchase less coverage and deposit the premium savings into a tax-advantaged account like an HSA.

Those same agents and brokers, though, report that many of their clients don’t understand Health Savings Accounts and would prefer a plan with up-front copayments for doctor visits and prescriptions. It’s strange, isn’t it, that agents sometimes have trouble selling their clients on a solution that they’ve chosen for their own families?

Maybe it’s time for a new approach

If you’ve had trouble convincing clients that a High Deductible Health Plan paired with a Health Savings Account actually provides better protection than a traditional copay plan, perhaps you should try a different approach. Here’s an idea…

Instead of leading with the discussion about HSA-compatible plans, you could just talk with your clients about the type of coverage they think they want. If, for example, they’d prefer a PPO plan with flat-dollar copayments for lower-cost services, you should start by showing them that plan. When you do, though, be sure to point out the deductible and overall out-of-pocket exposure and tell them that they’re going to want to set aside some money on a monthly basis to make sure they can pay for any unexpected expenses that may arise.

Ultimately, that’s what health insurance is for—to pay for big, unexpected expenses. Unfortunately, though, health insurance alone is no longer enough. With out-of-pocket limits on some plans now approaching $8,000 for an individual and twice that amount for a family, clients who have health insurance could be in big trouble if they wind up in the hospital. That’s why you need to prepare them for this possibility and explain the importance of setting up a “rainy day fund” for possible future claims.

At this point, one of three things will happen:

  1. The client will nod his or her head, agreeing with what you say, but ultimately choose the copay plan anyway because he or she is more worried about the everyday cost of doctor visits and prescriptions than the unlikely cost of a hospital stay. At least you tried.
  2. The client will agree with you and do as you suggest.
  3. The client will explain that your suggestion makes sense but that it’s not in the budget. With the cost of health insurance, there’s simply no money left to put into a rainy day fund.

For those who can’t afford to set aside additional funds but agree with the need to do so, you can then explain that there is another option. If they choose a plan without the fixed copayments for lower-cost expenses, they can use the premium savings for the rainy day fund you’ve already discussed. And, as a bonus, they’ll even be able to take a deduction on their taxes when they deposit money into this account. Additionally, the premium savings is enough to cover any anticipated qualified medical expenses they will have, and because the overall exposure on the HSA-qualified High Deductible Health Plan may actually be lower than many copay plans, they’ll reduce their overall exposure while contributing to their account.

Here’s the punch line of the whole conversation:

Most years, most people don’t use that much health insurance. However, the reason people buy health insurance is because eventually most of us do have a big, unexpected expense that could wipe us out financially, and the best way to protect against that expense is to have both health insurance and a savings account. By choosing a less expensive plan without up-front copayments and depositing the premium savings into a Health Savings Account, people may, over time, have their out-of-pocket exposure completely covered and can have the peace of mind that comes with being protected financially. On the other hand, those that continue to purchase more expensive copay plans might have a tough time paying their share of the bill when that big, unexpected claim does happen.