Medical Savings Accounts Study: Case Studies
Windham Health Savings Plan

• Sponsor: Windham Hospital in Willimantic, Connecticut

• Coverage: Traditional plan coupled with bank savings plan.

Windham Hospital developed a concept similar to a traditional "Christmas Savings Account". The objective of this savings plan is to provide a regular, disciplined way for people to set aside potential out-of-pocket medical expenses through periodic deposits into bank savings accounts. This plan is available to both Hospital employees as well as interested employers and citizens in the Willimantic area.

The hospital savings plan is offered in addition to a standard health plan. This plan uses individual bank savings accounts with restrictions on withdrawals. The primary purpose of this plan is to encourage employee savings to pay for their health insurance deductibles and coinsurance. It does not specifically include the high deductible medical insurance part of Medical Savings Account programs.

"Positive incentives linked with cash rewards place employees and their families in active roles as managers and keepers of their own best interests and health."

The Savings Plan has three prominent features:

1. Individual, non-interest bearing bank savings accounts. The employee and the employer each deposit $10 per week into the account. Annual employee deposits can amount to $1040 with the matching plan.

2. Discounts from participating hospital, physicians, and pharmacies. Each forgive a portion of their standard charges in exchange for direct withdrawal authority and from the account.

3. A system to authorize monetary transactions, monitor accounting processes, and manage direct demand withdrawals from individual accounts.29

If spending is below the annual deposit, dollars remaining in the savings accounts may be left in. Or account owners may want to withdraw funds or move dollars into other investments. For example, over a three-year period a family may spend a total of $900 out of their bank health plan account. With $2200 remaining, this family might choose to leave a balance of $500 in the health plan bank account and move $1700 into a qualified IRA. As a health savings plan account holder, the employee is an active decision maker and retains greater financial security and personal control.

Windham Hospital's plan is not designed to work like a Medical Savings Account coupled with a high deductible insurance program. One magazine reports that the hospital employees' plan reduced health plan spending by about $4 million, but this report has not been verified. Employee acceptance of this plan has been favorable. The program is reputed to enjoy reasonable success, especially in a community described as having high unemployment and a low wage base. Health care providers report that more people are paying their bills.

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