Brokers “do a disservice” in not pitching this health strategy

Producers assisting clients to enroll in an Obamacare plan may be leaving out a key cost-saving measure.

Life & Health


The health savings account (HSA) is a little understood and largely mistrusted approach to financing healthcare. Given the increased purchase of high deductible plans under the Affordable Care Act, however, more Americans now qualify for an HSA than ever before.

And, they are expressing interest in alternative health insurance solutions.

As such, producers who assist clients in purchasing high deductible plans through the federal or state exchanges are making a big mistake if they don’t also pitch an HSA, said senior analyst Laura Adams.

“I think certainly [brokers] are doing a customer a disservice if they’re not giving them some education on being eligible for an HSA,” Adams said. “Many people enrolling in Obamacare are choosing high deductible plans and don’t realize they could set up an HSA and be getting even more savings.”

To qualify for an HSA, individuals must have a health insurance deductible of $1,250 or higher. For families, deductibles must be double that amount. Money contributed to an HSA is tax-free and available for use on everything from doctor’s visits to acupuncture services. Under the ACA, HSA holders can even withdraw their savings to pay for things like insect repellant.

Thanks to these opportunities, 50% of Americans now say they are somewhat or very likely to use an HSA to cut their taxes, a new report revealed.

However, producers hoping to sell these accounts will have some informational hurdles to clear. The same report found that 52% Americans falsely believe they can use money in their HSA to pay for over-the-counter medications and 51% are under the impression they can use HSAs to pay for health insurance premiums.

In truth, the ACA now stipulates that HSA money can only be used for prescription medications, with the exception of things like insulin or bandages. HSAs can also not help contribute for health insurance premiums, which must be paid by the consumer separately.

Cultural prejudice against HSAs also exists, points out Mark Brown of M. Brown and Associates. Despite his personal belief in the value of an HSA, Brown says he sometimes has trouble convincing his clients of it.

“I’m very big on HSAs. I really believe it makes sense for both commercial clients and their employees,” said Brown, who typically assists small to midsize businesses in drafting a benefits package. “However, most people think they’re being cheated. They don’t give it a chance.”

To overcome these preconceptions, Brown said he explains how HSAs and high deductible plans help clients save money in their monthly premium, which can then be used to cover the deductible.

“It’s just very basic logic. Once [clients] get used to it, they generally think their HSA is great,” he said.

Adams added that even if an account holder withdraws all their money on a yearly basis, and HSA is still instrumental in saving a client money.

“You’re still getting a tax savings,” she stressed.

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