Farm Couple Takes New Approach to Health Insurance
Submitted by Editor on Fri, 07/17/2009 - 12:05pm.
Charlene M. Shupp Espenshade
Special Sections Editor
Editor’s note: This is the first story in a series about how farmers are addressing health care challenges.
MILLERSTOWN, Pa. — With the price tag to fully insure a self-employed family running at about $17,000 per year, many farm families are looking for options on how to make health care more affordable.
Matt and Jackie Matter of Millerstown have opted to take a different approach. Instead of paying for an insurance plan with a higher premium, they have changed to a high deductible plan and health savings account, or HSA. The Matters operate a 400-acre crop farm and heifer growing business. They have a 1½-year-old daughter, Bethany.
When Preston Sharp, an insurance agent with the Stewardship Group, approached them with the concept of an HSA earlier this year, both said the idea held appeal.
An HSA is a tax-advantaged medical savings account available to taxpayers who are enrolled in a high deductible health plan. The funds contributed to the account are not subject to federal income tax at the time of deposit.
Jackie said they did not consider an HSA until they needed to add the maternity rider on their health insurance policy when they started to plan for children. That rider doubled their insurance premiums. The appeal of the higher deductible plan combined with the HSA was an opportunity to save some on monthly expenses.
The HSA works like a pre-tax savings account in that they can put money into and draw out of as needed. One key difference from a personal HSA and a plan offered through an employer is that the funds can roll over to the next year. For this tax year, the contribution limits are $5,950 for a family, $3,000 for an individual.
“As long as the money we put in and take out is for a medical expense, we do not have to pay taxes,” Matt said.
While the option of an HSA has been around for some time, the concept is not widely used for individual policy holders. The Matters said that when they visited their local bank, they were the first couple to set up an HSA account.
“We were paying close to $2,000 per quarter (for insurance) and we only go to the doctor about twice a year” with exception of their daughter’s well-child visits, Jackie said. “We were paying $8,000 a year for a $100 doctor visit. That does not figure out at all.”
With the plan they have opted for, they have cut their premium in half and are now banking the balance to build the account.
“It just makes a lot more sense,” Jackie said.
Matt likes the plan as it provides another means to help reduce their tax bill.
Why don’t more farmers use it? Matt said it’s probably a combination of not understanding the program and a reluctance to change. He also believes that, while most insurance companies offer the program, they do not promote it to their customers.
“People don’t like change,” said Matt. “However agriculture is at a major crossroads right now. We have to change” to remain in business.
Matt agrees that the HSA will require some more financial management for them, but for the savings, they believe it is well worth the effort. They had looked at all other options for cost cutting and savings in the business. Health care was one area they saw an opportunity.
Sharp said that like all plans, it is not without its shortfalls, but it can be a viable option.
“The idea is not that it is extraordinarily cheaper, but the difference is instead of sending the entire amount to the (insurance) company ... the farmer can keep some of that money in his own pocket to deal with issues as they come up and to choose where it is going and when it is going.”
He also noted it gives farmers some flexibility in where to channel their money in tough price cycles. People willing to do a little extra administrative work and who want to have more control over their money are key people who would be interested in an HSA, he said.
With the rising cost of health care, Sharp said people are starting to take a second look at these programs as a way to control health care costs.
As to when to start evaluating the farm’s insurance plan, anytime is a good time to begin research on the best option, Sharp said.
Another insurance savings for the Matters comes by way of the Stewardship Group being a part of the Mennonite Mutual Aid program, which allows clients to sign off on their right to sue for malpractice.
“That’s what’s driving the cost of insurance,” Matt said. Doctors and hospitals have been forced to cover for the risk of malpractice.
Noting the national debate on health care, Matt is quick to point out that the problem is not the quality of health care, but the reform the system needs to address frivolous malpractice lawsuits.
“The health care system is not broken. You go to the doctors, they do what they have to do, and they make us well. We don’t have to wait,” said Matt. The problem is the price.
Charlene Shupp Espenshade can be reached at (717) 721-4426 or cshupp.eph@lnpnews.com. Feel free to contact her with your own health care stories and comments. Facebook users can also post comments on the Lancaster Farming fan page.
Charlene M. Shupp Espenshade
Special Sections Editor
Editor’s note: This is the first story in a series about how farmers are addressing health care challenges.
MILLERSTOWN, Pa. — With the price tag to fully insure a self-employed family running at about $17,000 per year, many farm families are looking for options on how to make health care more affordable.
Matt and Jackie Matter of Millerstown have opted to take a different approach. Instead of paying for an insurance plan with a higher premium, they have changed to a high deductible plan and health savings account, or HSA. The Matters operate a 400-acre crop farm and heifer growing business. They have a 1½-year-old daughter, Bethany.
When Preston Sharp, an insurance agent with the Stewardship Group, approached them with the concept of an HSA earlier this year, both said the idea held appeal.
An HSA is a tax-advantaged medical savings account available to taxpayers who are enrolled in a high deductible health plan. The funds contributed to the account are not subject to federal income tax at the time of deposit.
Jackie said they did not consider an HSA until they needed to add the maternity rider on their health insurance policy when they started to plan for children. That rider doubled their insurance premiums. The appeal of the higher deductible plan combined with the HSA was an opportunity to save some on monthly expenses.
The HSA works like a pre-tax savings account in that they can put money into and draw out of as needed. One key difference from a personal HSA and a plan offered through an employer is that the funds can roll over to the next year. For this tax year, the contribution limits are $5,950 for a family, $3,000 for an individual.
“As long as the money we put in and take out is for a medical expense, we do not have to pay taxes,” Matt said.
While the option of an HSA has been around for some time, the concept is not widely used for individual policy holders. The Matters said that when they visited their local bank, they were the first couple to set up an HSA account.
“We were paying close to $2,000 per quarter (for insurance) and we only go to the doctor about twice a year” with exception of their daughter’s well-child visits, Jackie said. “We were paying $8,000 a year for a $100 doctor visit. That does not figure out at all.”
With the plan they have opted for, they have cut their premium in half and are now banking the balance to build the account.
“It just makes a lot more sense,” Jackie said.
Matt likes the plan as it provides another means to help reduce their tax bill.
Why don’t more farmers use it? Matt said it’s probably a combination of not understanding the program and a reluctance to change. He also believes that, while most insurance companies offer the program, they do not promote it to their customers.
“People don’t like change,” said Matt. “However agriculture is at a major crossroads right now. We have to change” to remain in business.
Matt agrees that the HSA will require some more financial management for them, but for the savings, they believe it is well worth the effort. They had looked at all other options for cost cutting and savings in the business. Health care was one area they saw an opportunity.
Sharp said that like all plans, it is not without its shortfalls, but it can be a viable option.
“The idea is not that it is extraordinarily cheaper, but the difference is instead of sending the entire amount to the (insurance) company ... the farmer can keep some of that money in his own pocket to deal with issues as they come up and to choose where it is going and when it is going.”
He also noted it gives farmers some flexibility in where to channel their money in tough price cycles. People willing to do a little extra administrative work and who want to have more control over their money are key people who would be interested in an HSA, he said.
With the rising cost of health care, Sharp said people are starting to take a second look at these programs as a way to control health care costs.
As to when to start evaluating the farm’s insurance plan, anytime is a good time to begin research on the best option, Sharp said.
Another insurance savings for the Matters comes by way of the Stewardship Group being a part of the Mennonite Mutual Aid program, which allows clients to sign off on their right to sue for malpractice.
“That’s what’s driving the cost of insurance,” Matt said. Doctors and hospitals have been forced to cover for the risk of malpractice.
Noting the national debate on health care, Matt is quick to point out that the problem is not the quality of health care, but the reform the system needs to address frivolous malpractice lawsuits.
“The health care system is not broken. You go to the doctors, they do what they have to do, and they make us well. We don’t have to wait,” said Matt. The problem is the price.
Charlene Shupp Espenshade can be reached at (717) 721-4426 or cshupp.eph@lnpnews.com. Feel free to contact her with your own health care stories and comments. Facebook users can also post comments on the Lancaster Farming fan page.
