Health savings accounts (HSAs) aren’t exactly new to the marketplace, but the effectiveness and skill with which they are pitched and implemented vary greatly. The American Academy of Actuaries working group’s May 2009 paper on consumer-driven health plans (CDHPs) stated that “the total savings generated could be as much as 12 percent to 20 percent in the first year.” But even with these demonstrated savings, most agents are still uncomfortable presenting and implementing CDHPs.
So where and how do we begin selling HSAs? The key, as always, is selling to a client’s need. To determine this, we need to ask a few questions. First, who pays what? The simple rule is “the more the employer pays in premium, the better a health reimbursement arrangement (HRA) looks.”
You may be thinking, “Wait — I thought we are talking about HSAs?” We are, but if an employer is paying 75 percent of the total premium for both the employee and dependents, they might not want to fund an HSA. In an HSA, the employee is vested from day one, dollar one. An HRA, on the other hand, is a promise to pay, so if the money isn’t spent, it stays with the employer. In today’s tough economic climate, this is often the more attractive option.
Turnover is the next important question. If a company has a lot of employees coming and going (more than 10 percent per year), it probably isn’t a good idea to put money into an HSA since it has a higher probability of walking away with the employee. To recap: Unused dollars stay with the employee, not the employer.
A third qualifier is how rich of a plan your clients want for their employees. Do they have union employees? Do they work in a competitive marketplace where other employers may be likely to lure their prospective employees away with better benefits packages? An HSA is an especially great plan for these types of companies.
You might try two basic themes when prospecting for HSA clients (these are also valid for HRAs): cost savings and providing employees with a better benefit. In selling your services, you can tie these together in a 30-second sound bite. For example, tell prospective clients how you can save the average employer $1,000 to $3,000 per employee per year, and that you can do this the vast majority of the time by providing the employee with a better benefit — which is defined as the new HSA plan with a lower out-of-pocket than their current plan design.