Sunday, July 10, 2005

HSAs -- the scam employers and insurance companies are pushing

"Let the buyer beware...." and "when it seems too good to be true, it probably is...." Good advice for good ol' marketing scams, right?

Well, perhaps you should follow these warnings on the latest iteration of health insurance reform, called the health savings account, commonly pushed by HMOs and PPOs and other insurance management services.

At the end of last year, a flurry of companies and their health insurance providers made last minute sales pitches about HSAs to their employees. The concept was that, instead of the company paying (high) insurance rates to the provider, you opt for a higher-deductible plan (that costs less for the employer) and then take a pre-tax amount from your paycheck each week and put it in an HSA. Then, when you need money to pay for health care expenses (for prescription drugs, doctor visits, etc.), you simply withdraw the funds to help pay for the expenses.

If your company was generous enough to also put some cash into the account, this works really well. It also works well if you already have a lot of cash to set aside and happen to be able to guarantee no unexpected health needs that might wipe out the balance. (Because the money is always yours and will continue to earn whatever interest is offered by the financial institution.)

But the whole "benefit" of the HSA for the employer is a lower investment into health insurance premiums, so not all companies opted to do contribute to the employee HSA. Instead, these companies sold this "plan" as a tax shelter to employees who didn't have the common sense to do the math. (The cash comes out of the employee pocket, not the employer, now.)

We have a friend is currently in a bind because of his HSA. A member of his family is going to need surgery (unexpected of course).... Well, the high-deductible insurance plan's deductible has *not* been paid yet, and he will have to put out more than $1,000 to cover the cost of the surgery. Of course, his HSA does not nearly have that much in it.

You may think, he deserves this situation because he wasn't smart enough to know better. But really, should a company benefit (like health insurance) really be a scam? Shouldn't the HR department (at the least) make sure to help the employees figure out what really *will* work for them? Or should we have to evaluate all "benefits" now to see if they really are beneficial and not just a financial version of natural selection?

Why your best customers like you

The longer I've worked in marketing, the more I learn that what we do is reinforce the beliefs of our customers, rather than convince them.

This isn't bad, but it can help us understand our role in marketing so that we don't waste our time and efforts on fruitless activities.

Check out Kathy Sierra's post on the emotional aspect of decision-making.... good food for thought!