BB&T, a rather large bank based here in Winston-Salem, announced
today that they will begin offering Healthcare Savings Accounts to
commercial clients through their employee benefit subsidiary.  From the
article:

BB&T Corp.
will begin offering health savings accounts, or HSAs, to qualified
clients interested in an alternative to traditional insurance plans,
the company has announced.

HSAs allow account holders to make tax-deductible contributions
that can be withdrawn tax-free when used for qualified medical
expenses. Unlike flexible spending accounts, money left unspent at the
end of a year remains in the account.  

Winston-Salem-based BB&T (NYSE: BBT) will offer HSAs to
institutional and commercial clients through its employee benefit
subsidiary Stanley, Hunt, Dupree & Rhine. The company will also offer the accounts to retail clients who are covered by high-deductible health plans.

Having been self-employed or owner of a small business for much of
the past 10 years I’ve been keeping an eye on these things.  The
biggest thing they have to overcome is the fear factor for people used
to traditional health plans and HMOs and the sticker shock many will
experience when they look at the out-of-pocket expenses before they
reach their deductible limit.  They’re also often confused with "use it
or lose it" plans so people are worried they won’t get to keep the
money they don’t spend.

Some view the HSAs as just another way for businesses to shift the
financial burden of healthcare to their employees, but especially in
the case of very small companies HSAs may offer the only way to provide
any health benefits.  And for the self-employed it’s definitely
something they consider.  Here’s some back of the envelope calculating:

Say you have a family of five, you’re with a traditional health
insurance company like BSBCNC and you pay $700 in premiums per month
which gets you 80/20 coverage for all medical procedures (you have to
cover 20%) and a deductible of $2,500 per year.  On top of that you pay
$30 per office visit and $15 per prescription.  Let’s assume that each
person in the family goes to the doctor once a year (very optimistic)
and gets one prescription per year and no one needs a medical
procedure.  That means your total expenditure for the year is $8,625
and if anyone in the family has to have an operation or stay in the
hospital you’re talking $10,000+ per year.

With an HSA, which is tied to a high-deductible health insurance
plan, you’re probably looking at premiums in the range of $300 per
month and a deductible of $5,000 per year minimum.  Assuming that
co-pays and drug benefits are about the same your looking at saving
$400 month in premiums or $4,800 year.  If you contribute the same
amount per month to your HSA account that you were paying in premiums
you’ll end up spending the same amount of money IF someone in your
family is sick and you exhaust your entire deductible. But if no one
gets sick you get to keep the money you don’t spend in the HSA account
and roll it into the next year, kind of like an IRA.  After a couple of
years you can actually reduce the amount you contribute each month
because you will have built up a cushion that more than covers your
deductible and incidental medical expenses.  With a traditional
healthcare plan your premiums are gone whether or not you’ve been
sick.  In other words the insurance company is keeping your money even
if you and your family have been as healthy as a horse.  The icing on
the cake is that your contributions to the HSA are tax deductible and
my understanding is that you can pay for things like over-the-counter
meds with the account as well.

One problem that HSAs have had in the past is that they’re typically
offered by
companies that no one has heard of so it makes people nervous turning
over such an important safety net to an unknown entity.  With name
brand companies like BB&T getting involved I think you’ll see these
things take off, so if you’re self employed or are a small business
owner you might want to check them out.

Also posted at Lowder Enterprises blog and Winston Salem Business.