Medical Savings Accounts Study
One Company Golden Rule Insurance

A familiar advertisement appears almost daily in the Wall Street Journal—Golden Rule's MSA plan and their 1-800 telephone number. A call to this number in early November brought a descriptive brochure in the mail within seven days of placing the call. Golden Rule began marketing Medical Savings Accounts in its group insurance product line in 1993. At first, the MSA plans were offered as simple options to traditional indemnity-type plans.

Initially Golden Rule sold the benefits of MSA plans to small groups and employers, some as small as three employees. With employer interest greater than anticipated, Golden Rule is expanding its MSA products to meet the needs of the medical marketplace.

Large employers are now getting bids for a standard MSA plan and also for the new Golden Rule Managed Care MSA plan. Some employers with prior HMO contracts are switching to MSA plans completely while others are offering MSAs alongside traditional health plans and managed care prepaid plans.

"Employers may expect increased employee satisfaction, less sick pay leave, and greater productivity."

Prepared in part by Golden Rule Insurance Co.

We analyzed plan cost comparisons of seventeen randomly selected employer groups who have chosen Golden Rule's MSA plans. These employers are located in Indiana, Ohio, Virginia, Louisiana, Michigan, Illinois, Texas, and Missouri. Costs were available for individual and family coverage under MSA plans, and with traditional insurance polices, deductibles, and copayments.

Only plan costs were used in this comparison. These figures do not include the actual or projected out-of-pocket employee spending on deductibles and copayments. Therefore, the spending shown for the traditional policies are understated. The traditional plans have no returns or year-end rebates. For the same reason, the spending for MSA plans is overstated. Higher true savings occur in every plan.

From a recent report of three thousand MSA-covered employees, only ten reached or exceeded their deductibles after six months of the 1994 plan year.13 Should this pattern continue through the year, at least 95% of employees will have cash in their accounts at the end of the year—without compromising preventive or diagnostic health practices.14

Unlike traditional health benefits, MSA plans assure employees of explicit and fixed limits to out-of-pocket costs. In fact, there are no out-of-pocket expenses for any covered services beyond the predetermined contributions. Though some analysts have suggested building additional copayment structures within the plan but outside of the total MSA contributions, there is little point since, in this variation, all traditional deductibles, coinsurance, and copayments no longer apply.

Of all the MSA plans and programs evaluated in this study, Golden Rule's Medical Savings Account Plans are the least complex, the most easily understood, and the most widely implemented health plan. Employer inquiries for preliminary quotes are answered within five days of receipt. Formal actuarial-based quotes are provided within five weeks.

Administration of employee-owned MSAs is straightforward. Golden Rule offers employers guidelines, forms, and ledger entry rules to handle ordinary manual accounting. For small employers who wish to manage the MSA accounts and reporting, Golden Rule provides a manual that uses DOS Quicken as the software accounting tool. For employers and employees who prefer not to bother with the details, Golden Rule's MSA Administrators can provide all required MSA reporting, reimbursements, and record keeping.

"...at least 95% of employees will have cash in their accounts at the end of the year—without compromising preventive or diagnostic health practices."

"Unlike traditional health benefits, MSA plans assure employees of explicit and fixed limits to out-of-pocket expenditures."

Evergreen Freedom Foundation P.O. Box 552, Olympia, WA 98507 Phone: (360) 956-3482, Fax: (360) 352-1874 Email: effwa@effwa.org