Editor’s Note: While Health Savings Accounts (HSAs) aren’t exactly new, not everyone in the medical travel industry is familiar with how they work. In order to assist with reader understanding of the implications of our conversation with J. Kevin McKechnie, executive director of the American Bankers Insurance Association and director of the Health Savings Account, we developed this brief primer on HSAs. We hope you find it useful. J. Kevin A. McKechnie, executive director of the American Bankers Insurance Association and director of the Health Savings Account (HSA) Council Medical Travel Today (MTT): What is your interest in the medical travel market from a generic standpoint, particularly your perspectives on its tie-in to Health Savings Accounts? J. Kevin A. McKechnie (JKM): We are big believers in freedom. Thats a personal saying, and so to the extent that people want to travel around the world, have something fixed, and then convalesce on a beach somewhere Im for that. I have the benefit of being able to work in an organization on behalf ofan industry that by its nature, promotes the advantages of personal choice. Our work is designed to assist programs like the medical travel industry. After all, its a cash product. MTT: Do you know of any HSAs that are currently offering a medical travel benefit? JKM: Theres only one other gentleman that Ive talked to about this, and hes actually the director of a facility in Costa Rica. He asked me about the applicability of HSAs to medical travel, and I replied that HSAs apply to anything where the service bought satisfies two requirements:
- The first applies to the HSA funds, because theyre a tax-exempt account. You have to be buying a service that is on publication 502, issued by the IRS. Thats where the IRS lists the things you can use your HSA for. Obviously, if you pay tax on your money, you can do anything you want with it — but thats not an HSA, thats a savings account. In an HSA environment, it has to be something that the IRS deems qualified.
- The second thing that has to occur is that it is not just about the money in the account, its about the insurance. So, if you would like the qualifying insurance to pay for this, it has to be a qualified medical expense.
Youre only going to get reimbursed to the extent that the insurance company would pay for that medical benefit either inside its network or, after it applied its out-of-network architecture to the charge. Lastly, you would have to check that the insurer isnt building its premium based upon restricting where you get the service done. All of those things have to be in place. MTT: If you have an HSA plan with an independent HSA company, your health plan, or whatever source and the expense qualified or actually less than you were going to be spending if you accessed care through the existing benefit program do you see that as an attractive option for individuals? JKM: Absolutely, especially if it falls on your deductible. Nobody really cares about where the expense lies in terms of being higher or lower and what is reasonable and customary. You have to be able to take this money and apply it to your deductible so the insurance company knows when its obligations kick in. There is a little hassle around that part. So lets say youre on the list for a knee replacement or for dialysis or something of that nature and you decide you want to go to Central America to get this done. Thats fine, and would require working up some recommendations about where you would go and the estimated costs. Individuals need to contact their insurance company, and the insurer would probably work on this and advise you where you go. MTT: Do you know of any people or any individuals doing this under an HSA or people that have been taking advantage of a medical travel benefit? JKM: I dont know anyone personally, but I know there are companies that have dealt with this issue and are addressing the queries. As long as the treatment or procedure is a permissible expense and the expenditure isnt above what they would normally pay, they are amenable. Some of them may think that the expense is subject to the out-of-network architecture because obviously, their network doesnt include a Costa Rican facility. Either way, youre allowed to use your HSA funds and in some cases, its an insurable event which is good. MTT: Do you think that the connection between HSAs and medical travel opportunities will be a faster-growing trend once people realize they can do this? JKM: I do for a couple of reasons. First of all, the Obama health reforms are going to result in massive physician shortages in about 30 months. The American Medical Association says were light about a quarter-of-a-million general practitioners and family doctors as soon as everybody is able to go to the doctor on an insured basis, theyre going to in droves. So, if youre American and need to find care that is both accessible and affordable, youre going to be looking at places like Toronto, Vancouver, and even Mexico. If you want to go even further, you are going to get on a jet and go where you can get care quickly and confidently. The reason why that solution isnt going to be available to the vast majority of Americans is they dont have any cash. They have to go and talk to the insurance company exclusively to get a yes or a no. If you have cash, then think of it this way: youre going to be allowed to spend money on a knee replacement operation which is a permissible activity according to the IRS so off you go! Then there will be this negotiation, which I hope is not a very large negotiation, about what percentage of the money you spent is credited toward satisfying your deductible — and what amount of money you spent becomes insurable, either subject to the out-of-network architecture or some other contractual limitation thats in your policy. We are not sure how you manage this, but the issue came up in other states because it applies to medical travel. People just dont get on a plane and go to Costa Rica. First, you get on the phone and call your insurance company, let them know what your plan is and talk it over. Then get on the plane. Youll then know what the financial arrangement is going to be. MTT: So, its up to the individual to navigate or make arrangements that they feel are appropriate. How do you propose that the individual would know the quality or the doctors or any other standards that are being offered at the destination? JKM: You really dont have a very good idea but on the other hand, you dont have a very good idea here in this country either. We make assumptions all the time, and so theres something of a prejudice in that regard. But I would imagine, although I havent done this myself, that this endeavor is comparable to other areas of my life where Ive investigated paths less traveled. I imagine that people who pursue medical tourism, at least according to some of my colleagues, are vested in their own healthcare to the extent that they are not going to leave any stone unturned and theyre not going to enter a facility that looks like something out of a bad Moscow movie. Its not going to be that way. These people are paying for the privilege of accessing medical services quickly. They need to be confident that rapid access to quality care is what they will be getting. Thats what matters most to people who are willing to travel. MTT: Documenting quality is certainly a priority. Do you think JCI accreditation, and now Press Ganey scores would be important in documenting quality? JKM: I see a lot of that, but if you go on some of the websites of institutions offering medical services out of the country, its really the universities that are providing the branding, per se. A lot of these people are foreign nationals anyway. They come to the United States and study at UCLA, Harvard, or Stanford medical schools then, they go back to Costa Rica or Columbia and say, Im a graduate of Harvard Medical School. MTT: Now a $64,000 question: What about Medicare? Do you see HSAs getting any traction in Medicare and would it open up the medical travel market more quickly? JKM: It will, but you have to understand that the idea of putting seniors in charge of their own medical treatment is a terrifying prospect for most elderly folks. Theyre not interested in that dynamic, but theyre going to be pushed to really look at this as early as 2013. It isnt just that the system is going bankrupt — thats 10 years or so away. Its more the fact that as people in the marketplace get older, theyre going to have 10 or 15 years experience working for John Deere or Wal-Mart or all the places that have HSAs where the experience and level of freedom and choice have been available. You simply cant get this with any other policy. Theyre going to then come to the gates of Medicare where you can barely get an appointment. Thats another feature of the reform package: Medicare reimbursements to physicians are so low; its unclear to me that any physician is actually going to accept a Medicare patient. Its much more likely that physicians are going to opt out of all insurance completely, and patients will be forced to submit claims on their own and see what Medicare covers. No doctor can afford to run his/her physical plant on essentially a quarter of what commercial insurance reimburses and thats where we are going with Medicare. MTT: While you have not yet taken advantage of any of the medical travel opportunities, is it something you would consider personally? JKM: Absolutely I would. I travel pretty frequently in Europe and the Caribbean. The reason I am making the comment about our universities branding some of these facilities is because I have seen these doctors practicing there. I dont think were talking about heart transplants were talking about cosmetic surgeries, sometimes reconstructive surgeries or more orthopedic right now simply because there is a wait for all of these things. MTT: Yes, for bariatric and others surgeries. JKM: Exactly. For those things, I wouldnt have any problem at all getting on a plane and going to see a doctor. And I dont think a lot of other people would either. Its about convenience and price. And with HSAs, we have an insurance product that helps you do that. MTT: With medical travel and medical tourism delivering such benefits, why do you think U.S. employers have been reticent to offer it as a benefit package? JKM: I think its a couple of reasons. To a great degree, I let employers off the hook. It was decades ago when World War II happened, and thats when we got off on the wrong foot in making health insurance almost a captive of all of our employers in this country. We encourage them opportunistically at every turn, and so they are going to do the kinds of things that they need to do to exert control and to cut costs. They never had a tool like HSAs in the past. Now that they have this tool, its beginning to dawn on them that you can now consider a lot of the ancillary products that you didnt previously consider. Ultimately, they are looking for a healthy employee, thats why they offer these benefits in the first place. This might actually improve that. Now youve got somebody who is not out sick for days and waiting for treatment. Maybe if they allowed medical tourism, theyd be out fewer days, theyd get the treatment they want using their HSA funds and move on. Its kind of a preventive care initiative, along the lines of obesity treatments and wellness programs its all of the things that didnt used to be part of an employer program that are certainly now included as companies begin to embrace happier employees. Part II of this interview will be featured in our next issue. About J. Kevin A. McKechnie Executive director of the American Bankers Insurance Association and director of the Health Savings Account (HSA) Council, McKechnie ealth Savings Account (HSA)represents the ABIA and HSA Council before Congress. He served as legislative director to former Congressman William Dannemeyer, of California. He holds a B.A. in History and Political Science from York University in Toronto, Canada. The American Bankers Insurance Association The American Bankers Insurance Association is the separately chartered insurance subsidiary of the American Bankers Association and is the only Washington, D.C.-based full-service association for bank insurance interests. ABIAs mission is to develop policy and provide advocacy for banks in insurance and to support bank insurance operations through research, education, compliance-assistance and peer-group networking opportunities. ABIA membership consists of banks, and their affiliated agencies, insurance companies, marketing, and administrative services suppliers, non-bank lending organizations and other firms involved in the bank affiliated insurance industry. Additional information on ABIA can be found on the Internet at www.theabia.com. The American Bankers Association The American Bankers Association represents banks of all sizes and charters and is the voice for the nations $13 trillion banking industry and its two million employees. ABAs extensive resources enhance the success of the nations banks and strengthen Americas economy and communities. Learn more at aba.com. About The HSA Council The HSA Council is an organization of banks, insurers and technology leaders committed to increasing the adoption velocity of health savings accounts in the United States. The HSA Council represents its members before Congress, the White House and U.S. Courts in order to preserve the ability of Americans to pay for healthcare using an HSA. http://www.aba.com/aba/hsacouncil.htm