3 tips for breaking into the HSA market

3 tips for breaking into the HSA market | Insurance Business

3 tips for breaking into the HSA market
By most industry measures, health savings accounts (HSAs) are set to take off in the near future as high-deductible health plans become the norm. An insuranceQuotes.com survey reported that 50% of Americans say they are somewhat or very likely to use an HSA, while a private market survey from Alegeus Technologies pinpointed 2015 as the “tipping point” for employer adoption of private exchanges and defined contribution plans--two drivers of HSA expansion.

“We are extremely bullish on the opportunity presented by HSAs,” said Alegeus CEO Tom Torre. “We’ve seen very strong growth in the number of HSAs, and we see significant growth over the next few years as more companies adopt high deductible health plans and turn to a defined contribution model.”

Indeed, four out of five companies have already raised deductibles, according to a March survey from New York consulting firm Mercer. That means many more Americans will be shouldering health insurance deductibles of $1,250 or higher, qualifying them for an HSA.

While most agents understand the benefits an HSA can bring an individual or employer, it can be tough to crack the market. Here are three tips for breaking into HSAs and growing your book of business.

1. Choose the right individuals and employer groups
Danny O’Connell, a partner with Benefit Resource Group in Dallas, Texas, has been working in the HSA market since the plans were introduced in 2003. In his more than 10 years’ experience, he has learned a few things about the cultural prejudice against HSAs and who the most likely takers are.

In the group benefits world, that’s high-pay grade firms and companies with disparate employee income levels.

“HSAs really benefit highly compensated groups like law offices because they understand the value of the tax deductibility [on HSA contributions],” O’Connell said. “It also favors companies with widely different pay scales who are looking to accommodate people who want catastrophic coverage as well as more executive-level staff who can spend a bit more. HSAs are typically going to be a much cheaper solution compared to a $1,000 deductible plan the senior VP wants.”

As far as individuals are concerned, Torre believes older individuals who have some work experience under their belt are more likely to be receptive to HSAs than their younger counterparts.

“The advantage of an HSA is quite substantial, but it’s a bit of a tough sell to a 20-year-old who’s paying student loans and still establishing their life,” Torre said. “Older individuals on the higher end of the pay scale are more likely to understand both the savings and tax advantages of an HSA.”

2. Pitch HSAs as a retirement strategy
Torre sees potential for HSAs in all facets of life, but believes particularly strongly in the potential for the accounts to act as an alternative retirement option for individuals.

“The day you step into the workforce is the day you should start saving,” he said. “If your decision as an individual is to be in a high deductible health plan, it is just sensible to put as much money as can into an HSA account, which allows your balance to grow tax-free, which you can use after you retire.”

Of course, HSAs can also be used immediately for a variety of health expenses. The freedom, as well as the ability to save both for healthcare and retirement in one account, is very appealing to potential clients.

3. Introduce HSAs as part of a multi-year plan
Given the uncertainty of healthcare reform, HSAs can come as a godsend to a fretful employer wanting some long-term solutions, says O’Connell.

“One of the things I really like to do is proactively plan with my clients and lay out a multi-year plan,” he said. “With healthcare reform being delayed, carriers may offer a $3,000 deductible plan too employers and an HSA based on the price breaks and match up with IRS guidelines.”

Then, after a year or two—when employers and their workers have started to use an HSA and appreciate its worth—the client is ready for a 20% renewal, at which point it makes sense to transition to an 80/20 plan.

“Typically, clients I talk to say their agent never even told them the carrier offered that plan,” O’Connell said. “That means we are able to go in and get a good-sized client and offer them that option.”

The return for an agent is both client appreciation and loyalty. And, given HSAs’ current trajectory, the financial rewards aren’t likely to go away any time soon.

“HSAs are going to become more popular than ever,” O’Connell predicted. “They’re a very nice complement to catastrophic plans, which are now popular thanks to national healthcare reform, and provide a good way to offset some of that increase to your out-of-pocket. People get that when you relate it to them.”

Is there anything else you think should be on this list? Let us know in the comment section below!

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