Medical Savings Accounts

Non-Qualified Medical Savings Accounts: 
May provide even greater opportunities than people realize.

To begin with, the MSA is a concept sale rather than a product sale.

The agent has to understand how MSAs are constructed, and the purpose of each "piece" to explain the MSA to the prospect.

MSA’s are divided into two working parts:

  1. Part 1 is a medical insurance program that uses a high deductible (usually starting around $1,500)
  2. Part II is a funding piece to pay for the deductible, co-insurance, and any other first dollar out-of-pocket expenses below the deductible in Part 1.

The Future

The growth of the MSA market will only be limited by the narrow vision of the end user and the field-marketing agent.

The benefits industry has always responded positively to change, especially where such change represents opportunity.

By educating the public that there are cost-effective ways to "program" the use and reimbursement of medical treatments, nonqualified MSA providers will enable new premium dollars to be freed up for other uses.

By creating "flexible funded MSA accounts," benefit sponsors will provide the employee with a means of offsetting future out of pocket medical costs, while building a growing asset account for the future. This can become really important as employees reach the senior years, when medical expenditures are likely to grow larger.

Furthermore, the nonqualified approach allows for flexibility in funding. There could be both employer and employee contributions with concurrent tax benefits, There can be multiple funding options allowing for conservative employees, employees who want a higher return on their MSA fund dollars, and finally the "high account balance" employee (probably an owner, manager or professional) who wants a self-directed account with higher potential returns. All these are possible in the development and offering of non-qualified MSAs.

An important consideration for the MSA administration piece (which you are allowed to negotiate on a separate standalone basis according to the law---separate from any one product) is the proper adjudication of MSA claims.

Under some approaches, companies and / or administrators use a "shoebox" or debit card approach to reimbursement. Any arrangement which does not allow for the further repricing of claims (separate from the underlying medical insurance product) does not do the client financial justice.

Without this mechanism, MSA funds will be quickly "gobbled-up" in higher claim costs.

Regarding Agents

As for agents, if they want to be in this market, they will have to move away from the "cheat-sheet" mentality partially imposed by small group reform. No longer can they depend on computer software programs to tell them who is the cheapest carrier for a particular case "better known as who is making a mistake this year).

They will have to put on their "underwriting hat," and provide the necessary professional MSA solution for each of their clients.

By making the employer and employee partners in the plan design process, non-qualified MSA plans will flourish and become the largest premium segment of the MSA marketplace. The opportunities are endless.

Financial Super Markets, Inc.
Tel: 973.910.4039
Toll Free to order book:  888.MSA.GA12 (672.4212)
Fax: 973.842.0912