Early on, I learned the best advice: “Learn how you sell HSAs.” Paul Pilzer, the best-selling author of The New Health Insurance Solution, is a great book to read. This book will teach you everything you need to know about HSAs. It is unlike any other printed material. It will make it easier to sell health insurance.
You must first introduce HSAs and modify PPOs to prospects. This is crucial. Modified PPOs do not have set co-pays for routine visits or RX drugs. You will confuse them if you get in on the savings portion of the HSA. First, sell the premium savings! Let’s take an example: Mary, if Jethro and you select the PPO plan with the $25 Co-Pay, the premium will be about $75 per month more than the modified PO right?
This modified PPO HSA plan is what I recommend instead of the $25 copay. Instead of paying the negotiated rate for your husband’s routine visits to the doctor, it will cost you $50-$60 dollars on average instead of $25. Let’s look at it financially. Premiums are $900 higher per year if $75 is added per month. You can save between $25 and $35 each time you visit the doctor. Let’s assume you can save $35 every time you go to the doctor. To make up the $900 premium, you and your husband would need to visit the doctor $900 divided with $35 or 25 times.
Are you sure that Jethro and you will have to visit the doctor 25 times in the next year? While both you and the insurance company would make more money if we chose the other plan, I wouldn’t be responsible for your money as that is my job as your agent. It’s up to you to decide which plan is better for you right now. This is the most important step. This is the most important step.
Here’s an example. “Mary, this is another benefit of this plan. Uncle Sam can pay up to 30%-45% of your medical expenses each calendar year. Even better, you could get a tax deduction of up to $6000 each. How? Mary, this plan qualifies for you to have a Health Savings Account. Are you a 401K or an IRA holder? This is similar to a 401K or IRA, but better. You can contribute as little as $1 to $6000 per year (as a whole family) into a separate account, and then you can deduct the contribution from your tax return in the same way that you did your IRA.
You can withdraw that money at any time, and without penalty or tax, just like your IRA. That means you can use it the next day! You can use it to pay co-pays or deductibles for your child’s orthodontics. Your accountant can still deduct the entire contribution. The money accumulates tax-free until you use it. Mary is not required to contribute to an HSA. You don’t need to set it up and you don’t have any obligation to make contributions each year. If you or your husband require additional tax deductions, this is the only financial tool that allows you to immediately take the full amount and take it back out without any tax or penalty.
Although this feature is not the reason you choose this plan, it can make it more appealing financially than any other plan. We’ll let you know if this is a good financial decision for you by letting your tax professional. We have plenty of time to help you if you need information at tax time. If they get confused, make sure to email them the U.S. Department of the Treasury explanation of HSAs. This powerpoint can be emailed to your client to help explain HSAs. Click here to download the powerpoint presentation.
