InsurancePickle.com Articles

It is a case of the left hand not knowing what the right hand is doing. The health insurance broker comes in and explains how a QHDHP (Qualified High Deductible Health Plan) with an HSA (Health Savings Account) works, the employer likes what they hear, and implements the plan. And, either the employer, the employee or both of them start to contribute to the HSA and enjoy the tax savings that the accounts can offer. To be eligible to make a contribution to the HSA, you can only have the one health plan and that plan must be a QHDHP. If have a plan that is not a QHDHP or if you have more than one health plan, then you are not eligible to make contributions.

At a later date, an Aflac rep. (one of the hundred that have knocked on the door) comes in and, along with other benefits, sells hospitalization plans to the employees. And, more often than not (in our experience), these plans are not HSA compatible plans, so they end up “counting” as a second health plan and nullifying the eligibility to make qualified contributions to the HSAs. And, that would be absolutely fine if the employer and employee were made aware that they needed to stop making contributions. But, they usually are not or they usually do not pay attention to the warning – which is a problem. If they (employer or employee) ever get audited, they could be faced with taxes and fines for making contributions that they are not eligible to make – a risk not worth taking.

Make sure you are working with brokers that have a better handle on how to incorporate all of the benefits – including the voluntary benefits. Voluntary benefits sold as a tertiary item or a side bar do not work in the same manner that well-integrated ones would. Also, if YOU are the owner the business, then this is YOUR responsibility. We recently met with a doctor’s office who had a very inexperienced person handling their benefits, and she was not concerned that they were doing exactly what I described above. Also, to be clear, there are hospitalization plans that you can own with an QHDHP, but few people buy those because the benefits are very limited.

Every industry has their shining stars and rotten apples. And, as a company that works with and trains brokers, it is just very disappointing when a broker chooses a product that is not in the client’s best interest. Sure, if two products are more or less identical, but one gives the broker an added perk, then that is absolutely fine. But, when a broker claims to “represent 30 carriers in this space,” but consistently only sells the one or two companies that pay him (or her) the most, then that is just sad. It is sadder still when their client does not see through it. It is ok to have favorites, but have favorites because the carrier excels in product, price and service.