SMB Case Study: HSA Switch One Year In

Wednesday, December 3, 2008
Posted by Brawlin Melgar

Starting last November 1, 2007, I switched my small business to an HSA or Health Savings Account. Here is the original story: SMB HSA Case Study

During the next ten (10) years, we will be posting comments from employees, advisers, and management regarding HSA. We will also look at other HSA case studies for comparison. All of this information going forward will be posted to the Human Resource Link or use our search feature and search for 'HSA'.

Here are the company's first full year HSA results:
To summarize, the employees are generally happy with the HSA and they should be. All have thousands of dollars in their individual HSA plans. We have the Lumenos HSA plan from Anthem

The 7 original plan and 1 new HSA Plan participants have been contributing to their personal Health Savings Accounts with a payroll deduction of $10 to $50 per pay.
In the case of my family, we hardly used health care this year, so we have $5781.37 left in our account after all the basic medical visits including physicals and dental checkups. Our family contributed approximately $1000 of the balance we now have in our family HSA. We have a checkbook and a Visa debit card to access our HSA funds. (Anthem HSA Luminos plan carries a $5000 Deductable)

The company currently pays the entire Anthem health insurance premium for all covered employees (approx $3k per month). 

HSA equals Flexibility for SMBs
Starging January 2009, the company will contribute dollar for dollar up to $114 per pay for families and $57 per pay for individuals in the plan. Additionally the company will pay 100% of the premium as long as business continues to be good.

Projected 2009 company costs including premium and company contributions to employee HSAs are $5000 per month for all employees. 

However, the company at its sole discression may contribute nothing to the employee HSA and may require employees to co-pay the premium portion of the health insurance. 

This makes the HSA a much more flexible plan that can be totally funded in good years and minimized in bad years.

Costs could be as low as $2000/mo if the company was experiencing cash flow problems.

In the past, employees were contributing 25% of the premium, yet the company paid the following monthly average premiums:

2007 $4000/mo
2006 $3400/mo
2005 $3200/mo 

There was no HSA in place before so the entire cost of insurance was lost every year. 

The HSA allows the company to give more to the employees in good years and have the option of lowering costs in bad years. 

Here are comments from the employees regarding the company sponsored HSA plan:

"It's a lot simpler to manage and more flexible in what we can use it for.  I feel better about the HSA because I get great monthly statement showing my total account balance and all the deductions for each use."

"By contributing to my HSA I have made a health "cushion" while also saving on taxes deducted at the same time.  Two  occasions this year I had unexpected expenses of $400 or more which I paid for from this account.  The process was simple, I wrote a check and kept receipts for the filing of 2008 taxes.  They also send regular statements and I can view my account online."

"I have used my HSA. Not sure if my expenses have increased or decreased because I really do not have anything to compare this to. I do not think this is "risky" at all.  I actually contribute more and this has been really helpful! Again, I do not have a comparison to what was used here.  Compared to my past I feel there is more out of pocket expense that is caped with a given "HSA" account.  I am glad this is up and running."