BLUE BELL, PA – When a medical bill goes unpaid, the only one to benefit is the collection agency. That’s why insurers and health plans are looking for any edge to make sure patients pay their bills on time. Among their options is the health savings account (HSA), which allows consumers to set money aside for medical bills. A variation of that account is the HSA credit product, which increases the viability and use of an HSA account by pairing it with guaranteed-issue, low-cost credit. That’s where E-Duction comes in.
The Blue Bell, Pa.-based company specializes in offering employers and employees payroll deduction plans through guaranteed-issue programs. The company’s health expense account (HXA) program offers a CLEAR Card, which allows consumers to pay for goods and services on the spot, then repay those costs over time through a payroll deduction plan. Large medical expenses (over $199) are given six months of interest-free financing, while other expenses and small medical expenses qualify for two months of interest-free payroll deductions.
Company CEO Paul G. Chicos is quick to point out that the CLEAR Card isn’t your basic Visa or Discover card.
“We’re not giving them a credit card where they can go and get a big-screen TV. We’re giving them a budgeting tool,” he said.
As health care costs continue to escalate and more consumers have difficulty paying their medical bills on time – thus driving up providers’ collection costs and bad-debt accounts – health insurers are starting to look at health savings accounts that link reimbursement with the consumer’s paycheck. Companies like Aetna, Blue Cross Blue Shield, Cigna, FiServ and Humana all offer HSA credit products or are looking at new programs offering them, Chicos said. “It’s all brand-new stuff, all cutting-edge stuff,” he said.
Other players are entering the market at different angles. New York-based Empire Blue Cross Blue Shield and American Express have joined forces to offer a health savings account credit line tied to a “HealthPay Plus” card. Empire processes and pays the part of each claim that is covered by insurance, while American Express pays the patient’s portion and then bills the patient for that amount. Aetna, Inc. and Highmark, Inc., a Pittsburgh-based Blue Cross Blue Shield company, meanwhile, are authorizing automatic payments by members to medical providers from their HSAs.
E-Duction currently has five variations of its product on the market or in pilot stages, including a CLEAR Card program launched with Great-West Healthcare of Greenwood Village, Colo. in 2005 and a pilot program now underway with Minneapolis-based United Healthcare and Exante Financial Services in Texas.
Chicos points out that, according to recent studies, 60 percent of all Americans don’t save on a regular basis and about 45 percent of them live from paycheck to paycheck. That leaves very little money set aside for health expenses, and a large segment of the population – some say upwards of 30 percent – who can’t qualify for a reasonably priced credit card.
By offering what he calls “post-adjudication credit,” Chicos says E-Duction allows that segment of the population to both pay for healthcare costs on time and budget their needs accordingly. “It enables a smoothing (of debt), but a smoothing on a secure basis,” he said.
As more and more insurers and banks adopt credit card-based programs or look into them, Chicos sees HSAs continuing to gain traction in the healthcare market. The trick, he said, lies in convincing employers that HSAs can be managed like 401(k) plans.
“Imagine if we could give them an instrument where they could pay every single one of their medical expenses before taxes?” he said.