Questionable Vendor Trick

Wednesday, June 8, 2016
So I received an interesting response to my recent post on Health Savings Accounts (HSAs). I had lamented that "there aren't any Medicare HSA options. One would think they'd be ideal for healthy seniors," and noted that it was an "opportunity lost."

The response came from someone on LinkedIn who'd seen the post:

"Opportunity found! The Health Matching Account - HMA has no age limits, no underwriting, and is the same contribution regardless of age Assuming no claims to to reduce the account balance, accounts double after 3 years"

Intriguing, no?

So what is a Health Matching Account (HMA), exactly? Well, it purports to be "the ultimate medical savings account available ... the HMA awards our cardholders up to $3 in medical benefits or more for every $1 contributed into their HMA account balance as the program progresses."

They further claim that the plan is "a medical savings account governed by the requisites of IRS Publication 969 and 502, as they relate to medical care for reimbursement of medical expenses under IRS Code Section 213(d)."

All well and good, but here's the rub:

I'd specifically commented on the lack of a Health Savings Account option for seniors; HSAs are characterized by a number of requirements and benefits:

■ An HSA-compliant high deductible health plan
■ Tax deductible deposits
■ Tax advantaged growth and withdrawals

I have no particular objection to the HMA idea, but I was a bit put off by the way it's marketed.

For one thing, the IRC cite seems to lend HSA authenticity to the HMA concept, but it really doesn't. All that does is confirm that certain medical expenses may be reimbursed tax-free from a qualifying account. But the HMA folks state upfront that "reimbursements or payments made to an individual [from the HMA] are tax-free given the fact that they were paid with after-tax dollars."

Neat sleight of hand there.

I had some other concerns, as well, so I reached out once again to the Gurus of All Things HSA at FlexBank for their take:

"It sounds to me like I could open a master bank account, have employers funnel contributions to my bank account vs one they own (like we do now). I give employees a debit card for eligible expenses, manual submission for in-eligible (i.e. plastic surgery as they mention). I then get all of the interest credited on the master account and then "actuarially" credit some sort of interest back to each person individually based on their own account balance.

Not sure why someone wouldn't open their own savings account

Which pretty much echoes the conversation we had when I first mentioned this concept to them.

I couldn't find anything about the costs of this plan, other than a cryptic reference to "small maintenance fees." That's not really a big deal: if folks are interested, they'll call up for a quote. What did bother me was their comparison of HSAs to HMAs: there are some very disingenuous claims there. For example:

"HSA: Allows member balance to carry over to next year" [emphasis added]

Um, no: Health Savings Accounts by definition belong to the owner (insured), there's no "may" about it.

And this:

"HSA: Provides little to no interest crediting on member account balances."

This is also problematic: it's up to the individual to decide where (or if) to either save or invest (or both) their funds, and they're also free to move them to another  vendor (bank, investment firm, etc). There is no such freedom with the HMA.

All in all, while I appreciate that the HMA folks offer another alternative to more traditional plan design, I remain skeptical because of the rather dubious manner in which they're being touted.