A new card program which combines the benefits of health savings accounts with health-focused incentives could provide consumers with new benefits for healthier living.
In January, Medagate and MasterCard launched their new dual payment health incentives card, the first to combine a member account with a rules-based incentive rewards program that provides reimbursement for discounts at the point of sale (POS) on everything from health food to OTC medications.
The Dual Value Health Card enables employers and health plans to combine a member/employee health care funding purse with a restricted-spend purse for targeted items and incentives.
Industry experts say cardholders will benefit from having dedicated funds to spend on health care items while receiving discounts at the POS for targeted spending and rewards.
Health Payments and Incentives
The card can act as a defined contribution purse funded as a tax-deferred savings option such as a health savings account (HSA), health reimbursement arrangement (HRA), or flexible spending account (FSA). It also enables benefits administrators to add a closed-loop network to fund general purchases or direct spending to an individual product or stock-keeping unit (SKU) number, according to Devin Wade, president of Medagate.
“It’s two cards in one, or you can think of it as one card having dual purses. For instance, you have an HSA account adjudicated on the MasterCard network and a second card that gives the plan a ton of flexibility to let the cardholder do whatever they want,” said Wade.
Administrators can designate spending for certain items, such as flu shots, prenatal vitamins, or smoking cessation products. Retailers and benefit providers can also offer coupons or special promotions to specific populations. Funds and items on defined contribution and controlled spend lists can be reloaded and redefined at any time.
“If the employer says, ‘We’re going to help you offset the cost of vegetables,’ for instance, $50 worth of funds could be reserved for OTC funds for the purchase of vegetables. Or for someone identified as a smoker, their card could be used to offset the cost of Nicorette or other smoking cessation products,” said Wade.
Less Helpful Without OTC
Devon Herrick, a senior fellow with the National Center for Policy Analysis, says the new card looks like an interesting tool for patients trying to become savvy consumers of medical care. Unfortunately, there is a significant limitation: President Obama’s health care law did away with tax-free purchases of over-the-counter (OTC) health products.
“For most medical conditions, people initially self-diagnose and treat symptoms themselves, usually with OTC drug remedies. Nearly two-thirds—60 percent—of drugs used by Americans are OTC. The new health care law revoked the incentive to care for ourselves. This will undoubtedly drive up costs,” explains Herrick.
Dr. Roger Stark, a physician and health care policy analyst at the Washington Policy Center, said even though ObamaCare does eliminate OTC purchases with HSA money, the government has no way at present to check on HSA purchases, and merchants such as Walgreens and Wal-Mart have no incentive to police these purchases.
“The customer swipes his/her HSA credit card, and the transaction is completed. I don’t know how the government would track reward points, and my guess is that in the big scheme of things, this will be a low-priority undertaking,” says Stark.
Perk for Employees
Wiley Long, president of HSA for America, the nation’s leading online health insurance agency specializing in plans that work with HSAs, which is located in Fort Collins, Colorado, says the product might be an interesting addition to employer-provided health plans but he’s unsure how they would achieve significant savings.
“Most of my clients run very small businesses, and we’re all for preventative care, but from a business perspective I’m not sure who this product is aimed at. My take on it is that it could be a nice employee perk that the business could give their employees and say, ‘Look at what we are doing for you. And if you use it to buy vegetables or OTC products, we’ll reimburse you for it,'” said Long.