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Free: Fortune Special HSA section

Tips for Selecting an HSA Health Plan for Your Business

Steps to identifying and choosing a high-deductible health plan include:

  1. Know the qualification rules for a high-deductible health plan.

  2. Ask others (insurance agent, colleagues, associations, etc.) for recommendations and referrals to brokers and health insurance providers.

  3. Be aware that health insurance regulations vary by state; find out your state’s regulations.

  4. Checkout the insurance provider and broker for service quality and licensing.

  5. Consider using a smaller firm, where your business will make a difference to their business.

  6. Have insurance data of current health plan available (total cost, employee data such as health, age, gender, residency).

  7. Consider the cost of a plan as an individual or group (a “pool” of individuals/businesses).

  8. Call vendors and ask if they offer any HSA-qualified high-deductible coverage plans; mention you are reviewing health insurance providers, and would like to see what they can present. Also, explore and use online insurance brokers.

  9. Fill out the insurance application form completely and accurately, noting pre-existing conditions, age, gender, and residency.

  10. Use at least three vendors and get at least three competitive bids for high-deductible policies. It is important to get each bid broken down into inclusions and exclusions, for comparison.

Note: HSAs cannot be initiated unless a high-deductible health plan is already is place.

Additional Considerations

Know qualification rules for a high-deductible health plan:
Deductible minimums of $1,000 for an individual, or $2,000 for a family plan.

Out-of-pocket maximums not to exceed $5,000 for individuals, or $10,000 for families.

No co-pays allowed (no "first dollar" coverage) until after the minimum deductible amount has been met (no “first dollar” coverage at all after Jan.1, 2006).

Checkout agents for licensing and certification, they should have a professional designation, such as Registered Health Underwriter (RHU) or Registered Employee Benefits Consultant (REBC), or hold membership in the National Association of Health Insurance Agents (AHIA) or National Association of Insurance and Financial Advisors (NAIFA).

To know with whom you are dealing, use rating services, such as A.M. Best ( and NCQA ( that monitor customer satisfaction with insurance providers. Check with state licensing agencies for proof of a broker’s/agent’s current license.

Cost of health insurance is often higher for smaller businesses. Consider joining a “pool’ with others to lower costs. Trade associations, local business groups, state and local governments may offer you the chance to join a "pool” with others. Check to insure this is advantageous for your business.

Fill out the insurance application form completely and accurately, if any applications are incomplete or inaccurate, the company may either refuse to pay your claims or cancel your policy.

Get the details, ask insurance providers to provide you with:

  • Premium schedule (dates premium payments are due)

  • Benefits schedule (detailed list of what is or is not covered)

  • Premium rates and ALL applicable administrative fees (monthly and setup fees)

  • Copy of a sample agreement and application form (to review before you sign up)

  • Checkable references from other clients with similar needs

Be aware of the most overlooked aspect when selecting a company health plan Guarantee of Renewal. This means that the insurer will not be able to, at a whim, cancel your policy, as long as you continue to pay the premiums on time. If possible, also get a cap on percentage increases over the first three years. Get this in writing.

Other considerations:

Befoe you sign on the dotted line…READ the policy. Have someone else look at it. Make sure you're getting what you asked for.

Key Financial Considerations for Any Policy Plan

  1. Cost of premium(s) on monthly basis for the year.

  2. Amount of deductible for year.

  3. Maximum Lifetime Benefit amount for life of the policyholder.

  4. Exclusion of preventative care from deductible amounts.

  5. Discounts for use of in-network services or doctors.

  6. Additional costs for desirable options (i.e. maternity, prescription drug benefits).

  7. Guaranteed of renewal.

  8. Reasonable assurance of insurer's financial stability and ability to pay claims.

  9. Insurer's reputation for good customer service and rapid response to questions when they arise.

Good rules of thumb to keep in mind when choosing a vendor:

  • Companies with good reputations generally earn them and try to keep that reputation.

  • Capping expenses for the next three years is more important than the cheapest rate this year.

  • Providing quality health care is still the main objective and should be kept in mind at all times.

  • Keeping on top of your health care program can make a difference in your employee morale.

Health Insurance Checklist

Good plans should cover:

  • Inpatient hospital services

  • Outpatient surgery

  • Emergency services

  • Physician visits (in the hospital)

  • Office visits

  • Care by specialists

  • Skilled nursing care

  • Medical tests and X-rays

  • Preventive care and checkups

Good plans may or may not cover these options:

  • Prescription drugs

  • Mental health care

  • Drug and alcohol abuse treatment

  • Home health-care visits

  • Rehabilitation facility care

  • Physical therapy

  • Hospice care

  • Maternity care

  • Chiropractic care

  • Alternative health care

  • Well-baby care

The best plans may waive the deductible for preventative care, and effectively pay 100 percent of all costs for routine procedures, such as annual physicals, age-appropriate cancer screenings, pre-natal care, and required immunization for children covered by the policy.

When you buy a policy, the first premium is usually due at the time you sign the purchase agreement. Your check for will also include monthly administrative fees, and perhaps an initial setup fee as well.

Remember that direct agents, independent agents, and brokers all get a commission on the policies they sell.

Tips for smaller businesses

Trade associations, local business groups, state and local governments may offer you the chance to join a "pool" of businesses in a group plan; often these groups, because they are larger, get better rates. If the group plan offers a qualifying high-deductible policy, this may be a good route for your small business. If your small business has three or more employees, you can be your own "group," and usually get a better rate than an individual would.

Be aware that if you are self-employed and a sole proprietor, a major insurance company may not actively seek your business. You may be small commission to them – or you may be, in their estimation, uninsurable. This is particularly true if you have not had a health insurance policy in force within the last year.

Big insurance companies generally charge smaller business more, even for high-deductible policies. They may advertise what seem to be comparatively low rates, but their application forms usually state that, upon reviewing your application, they will reserve the right to offer you a slightly different plan at a higher premium cost.

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