Bridging the Way with HSAs Accounts
When Robert Hopper, PhD, a Santa Barbara insurance agent and author of two books on Health Savings Accounts (HSAs), was looking to offer a unique product with administrative ease, he called Toney Chimienti at Chimienti & Associates. Bob was looking for a supplemental benefit to offer clients who wanted to move to a HSA qualified high deductible health plans (HDHPs), but were concerned about large out-of-pocket exposure to employees during the first couple of years of the plan. He needed a plan that would help bridge the gap between the high deductible and the possibility of a hospital stay for an employee.
Chimienti & Associates worked with its voluntary worksite partner, Continental American Insurance Company (CAIC) to create the HSA Hospital Bridge Plan, a low cost supplemental plan to help reduce the feeling of risk for some of the large out-of-pocket health costs that can arise with a high deductible health plan.
"Many brokers say there is a real need for this product. But, they tell us that employers and employees are reluctant to move to an HSA plan because the employee is at risk for the first $1,500 to $3,000 of hospitalization costs in the first year or two while they are still funding their HSA accounts," says Toney Chimienti. This new plan would buffer the employee's risk by paying an indemnity benefit for hospitalization.
The annual cost for the HSA Hospital Bridge Plan is less than 10% of the out-of-pocket expense that could be incurred with a $3,000 HSA plan. It generally costs less than $20 a month.
This hospital indemnity plan was designed to comply with the applicable rules and requirements of the Treasury Department for HSA compatibility. It can be marketed as an HSA qualified supplement. CAIC is in the process of applying for a private letter ruling from the Internal Revenue Service regarding this matter.
"Insurance companies are beginning to offer some of these additional coverages with the HDHP and they will use these add-ons to make their plans more appealing to customers. Logically, insurance companies will compete for consumer business and use these optional coverages to differentiate themselves from other carriers in the marketplace," said Dr. Robert Hopper in his book, "The HSA Strategy: The Future of Health Insurance in America." (The book provides 13 units of continuing education credits through AD Banker at www.ADBanker.com or 800-866-2468).
The HSA hospital bridge plan pays a $500 per day in hospital benefit for the first five days; it has no pre-existing condition exclusion; and it is offered on a guaranteed issue basis with a minimum of 10 applications required to issue the group policy. ÒIn California, the average hospital cost is $30,000 for a four day stay. The per diem payment for a four day hospital stay can be $2,000 (4 days x $500/day = $2,000), which will lessen the risk a person feels when jumping from a traditional $500 deductible plan to an HDHP with a $2,400 deductible,Ó said Hopper. Many Brokers will also find it useful when moving their clients from HMOs to HDHPs.
Since this is an indemnity plan, there is no offset and the plan will pay in addition to their health insurance. This would give the insured the choice of saving their HSA funds for later use.
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If you are interested in marketing this new plan to your clients, please contact Chimienti & Associates at 559-733-1670, e-mail a sales associate at info@chimienti.com, or visit the Website at www.chimienti.com. CA License #0C36832. CAIC focuses on strength in relationships through its flexibility and responsiveness with producers. For more information, visit www.caicworksite.com.
