Health Savings Accounts Catching on in Connecticut

Published January 1, 2005

Six months ago, whenever Stephen Glick would ask business people if they knew about health savings accounts, or HSAs, two or three people out of a hundred might raise their hands.

Today, when Glick, the insurance trust administrator for 72 Connecticut Chamber of Commerce chapters, talks about HSAs, roughly 85 percent of the business people in the room know what they are and can recite some of the benefits.

To William Millerick, president of the New Britain Chamber, they are the first “truly new product in health care to come along in years.”

To John Leone, president of the Greater Bristol Chamber, “It’s a device that provides a tax advantage. You take the money you save on the high deductible, and build on that account. If you haven’t been drawing on it for dental care or eye care, you can roll that into a 401(k) plan and take it as a retirement pension.”

Attractive to Employers

To Larry McHugh, president of the Middlesex Chamber of Commerce, HSAs are potential cost-savers for decision-makers. Going into January, most employers in the state are facing double-digit annual percentage increases in health care insurance expenses.

“But with HSAs, we see people that have been uninsured coming back,” says Glick. “Smaller businesses are buying it. By 2006, 73 percent of the public will be in HSAs. We’re also adding value to chamber membership.”

HSAs make it possible for chamber members to get health insurance coverage at a good price, explains Millerick, “but you have to be a chamber member.”

Millerick, who is putting together an HSA seminar for certified public accountants in Plainville, Connecticut, believes accountants are key to the acceptance process.

“They’re first line; they advise people,” Millerick said. “If accountants understand HSAs, they’ll recommend them to their clients.”

Chambers Play Leadership Role

The key, says Glick, is education. That’s why Glick has been educating agents who support the chambers and the business community.

Glick has been traveling across the state, participating in seminars, conducting three a week. On a recent Friday, he gave a talk to the Health Care Council of Greater New Haven.

“I was educating 55 different businesses on how HSAs work,” says Glick. “The average employee is spending about $1,300 a year in medical expenses in addition to his health care coverage. When both employers and employees contribute to HSA accounts, they lower the premiums about 20 to 25 percent. Insurance becomes more affordable, and ultimately there’s more spendable income.”

“But, because it’s new, people need to be educated and comfortable about it,” Millerick says. “That’s why chambers are so important. Chambers have credibility with people. If the chambers speak on behalf of HSAs, people have a built-in amount of trust the chamber is going to steer them in the right direction. So, our role is critical. You can have a great product. But, if someone doesn’t communicate that product to the people, it just sits on the shelf.”

Leone agrees.

“Not every health care plan is for everybody,” he admits. “Every worker may not be able to take advantage of this. But for the vast majority of small-business people, HSAs will work well.”

Leone believes business people will accept a little risk with a high deductible if they can save money on overall health care costs.

Most chambers in the state have been sending out mailings to their members, letting them know that HSAs have arrived and are available through broker agencies.

The chambers have brought in William West, MD, to add clout to the program. West is a third-generation physician and president of First HSA Inc., a Reading, Pennsylvania company founded to promote, provide, and educate the public about medical savings accounts.

Employers, Employees Cooperate

West says the beauty of the HSA is in its collaborative arrangement between employer and employee, where they share jointly in the funding of an individual or family plan.

“The employee can determine his contribution while the employee has full ownership, choice, and control over the way his or her health savings account dollars are spent.”

West says that a health savings account coupled with a strong HMO plan makes sound business sense. ConnectiCare is the first HMO plan in the country to offer a high-deductible plan compatible with an HSA.

McHugh believes it will take time to breed the kind of successes that will lead to widespread acceptance from business people.

“Every new program is in that Missouri situation,” he says. “Not just show me. But show me and make it work.”

It appears the Connecticut chambers have set out to do just that.

Scott Whipple ([email protected]) is a business reporter for the New Britain Herald. This article originally appeared in The Sunday Herald Press and is reprinted with permission.