Finding a good fit with its small-business clients, Humana is believed to be the first HMO to take advantage of federal legislation authorizing medical savings accounts.
Under the program, individuals can accumulate tax-free funds, through individual or employer contributions, to pay for their medical care. A high-deductible insurance plan would cover the cost of catastrophic medical care.
Humana is offering MSAs to small employers in 14 states through its subsidiary, Employers Health Insurance Co. of Green Bay, Wis., starting Jan. 1.
A number of traditional insurance companies also have said they are making MSAs available Jan. 1.
"I'm not anticipating a huge wave of interest (in offering MSAs) on the part of HMOs," said Frank McArdle, a consultant with Hewitt Associates in Washington. "It's an experiment restricted to a targeted population."
One reason HMOs wouldn't want MSAs to expand is the thought that they would steal away healthier enrollees, McArdle said.
Recent federal health reform legislation authorizes a four-year MSA pilot, beginning Jan. 1, limited to employers with 50 or fewer workers, the self-employed and uninsured individuals. MSAs can be offered to no more than 750,000 people a year.
Humana jumped into the pilot program because its clients include "tens of thousands" of small businesses, many acquired with its purchase of Emphesys Financial Group in October 1995, a Humana spokesman said.
In addition, Humana's Employers Health subsidiary can handle the program's administrative functions.
Humana's plan carries a deductible of $1,500 or $2,250 for single coverage. MSA participants can spend their money with any providers they choose. But a unique feature of Humana's plan is that it offers participants direct access to Humana network providers. The company hopes smart consumers will see the value of spending their money in a credentialed network with negotiated fees.
MSAs earn interest, and participants can carry a balance over from one year to the next. Under federal rules, participants can withdraw the money for any use, subject to normal income taxes and a 15% penalty.
Humana's program will be offered in Arizona, Colorado, Florida, Georgia, Illinois, Indiana, Michigan, Missouri, Nevada, North Carolina, Ohio, Tennessee, Texas and Wisconsin. It also will be offered in Kansas City, Kan.