The American Medical Association (AMA) is helping physicians take advantage of the savings and flexibility of health savings accounts (HSAs).
The newest offering from the AMA Insurance Agency is an alternative to traditional health insurance for both personal and practice health protection needs.
"The AMA, largely through its advocacy efforts, was a major player in getting HSAs their legs in January 2004. Then, when HSAs actually became a viable product, since the AMA is such an advocate of patient choice in healthcare, we thought, 'Why wouldn't we want to do that for physicians, since it's good for everybody?' " Christopher Burke, president of AMA Insurance Agency, recalled. The agency is an AMA wholly-owned subsidiary, founded in 1988 with a portfolio that has grown dramatically through the years. Today, the agency partners with approved major carriers to offer physicians disability, long-term care, Medicare supplements, a Medicare-approved prescription drug plan and a host of other health offerings, plus insurance in other categories such as life insurance and property and casualty.
For the new HSA coverage, the AMA agency partners with First HorizonSM Msaver, Inc. Msaver has had a long history of offering medical savings accounts (MSAs), the first generation of such tax-saving accounts for healthcare. When First Horizon acquired Msaver in 2005, it brought to the table "the savings component and the technology platform that the bank provides to make it easy for people to deposit into the account, get the account set up, take money out to pay for qualified expenses and track those expenses," Burke explained. "The banking experience, I think, is really what's making this much more viable for people today." He explained that the AMA agency's role to provide physicians with "a little bit more of a concierge service," while taking advantage of First Horizon Msavers' expertise in the HSA field.
HSAs were created in Medicare legislation signed into law by President Bush on Dec. 8, 2003. They took effect in January 2004, replacing MSAs with a program offering additional tax advantages.
"When the tax code changed, the government really began to embrace HSAs as a way to self-direct healthcare choices, and they wanted to provide tax incentives for people to begin experimenting with this as a concept," Burke said.
To launch an HSA, the insured must already be covered by a high-deductible health plan which insures against catastrophe. First Horizon Insurance Services, an affiliate of First Horizon Msaver, offers the high-deductible health plans from several highly rated insurance companies.
Contributions into the tax-deferred HSA account are used to pay qualified medical expenses, and the HSA takes the form of a tax-exempt trust or custodial account for tax purposes. What's interesting is that some qualified expenses of an HSA — all tax-free — are not typically covered by traditional health insurance plans, such as dental, vision, orthodontics, prescription drugs and long-term care. Unused funds in an HSA can roll over from year to year, earning interest on a tax-free basis.
Both individuals and employers may set up and fund an HSA, and contributions can be made on a pretax or tax-deductible basis. HSAs offer flexibility and portability because even if the employer also contributes to an individual's HSA, the employee owns the account and can take it with him or her should employment cease. HSAs can be for one person or for families.
Burke said he believes HSAs offer particular advantages to physicians, their families, their associates and employees, and their practices' bottom lines. "Physicians are already dealing with this fabric of healthcare. Physicians obviously are providing quality, cost-effective care to themselves and their families and very often to their practice associates and their families," he said, surmising that routine healthcare within a practice is handled very cost-effectively.
"Why wouldn't you want to tailor your medical insurance program to that care experience? So you've got a program permitting people to save money on a tax advantage by creating a savings account for routine care, and if they don't spend it, it remains in there as a tax-deferred benefit that they can spend in future years or just save," he said. "Then you've got the high-deductible health plan that is there for any serious, unforeseen, major medical problem that protects you from personal bankruptcy, so it's an interesting combination."
Burke said the AMA Insurance Agency is starting to see more physicians offer HSAs as an employee benefit option while also offering a traditional health plan.
"An HSA may not be for everybody. It's a new concept, so it tends to be a little scary for some folks who are very used to traditional base plans. You don't want to force your associates into it, but you may be able to ease them into it via this sort of a combination plan," he explained.
About 150 HSA policies were written by the AMA agency in the last few months of 2006, "but we have not yet taken the huge step into the group practice environment," Burke said.
"We just began this fall to pilot a few programs to do that," he said. "We've seen some concepts that we've put out there begin to work. Typically within the group practice, it's going to be a matter of connecting with an insurance agent who's already working with that group practice and talking with that individual, because they trust that person for their health insurance needs. It's pretty difficult for us sitting here in Chicago to coach physician practices, especially with their group practice managers, unless you're face to face. So we began to experiment with some in-the-field experience this fall, and we'll see where that goes. But I think it's a really, very interesting program for practices, especially as they're being squeezed with their financials."
Physicians may enroll online at www.drhsa.com or call toll-free (877) 393-0518. Licensed agents will answer the phone.
The first step, Burke said, is acquiring the high-deductible health plan, which then makes the physicians eligible for the HSA.
"I think doctors are starting to embrace it more as a concept for them and their practices as its really taken root and become a viable product on these banking platforms," he said.
January 2007
