Case Study No. 115: NYLCare Health Plans

Growing MSA Appeal Signals Managed Care Overhaul When Congress gave the green light to small business owners and employees of small employers for MSAs (Medical Savings Accounts) last year, NYLCare Health Plans, Inc. of New York followed its marketing instinct and raced into an alliance with database experts MSaver Resources. With only three months of planning, it launched The NYLCare MSA Program in June Regarded as having the potential to generate a "quantum shift in healthcare," medical savings accounts, or MSAs, are commanding more attention from the media as well as employers that are intrigued by the claims of these programs to pay for healthcare more cost-efficiently. With the NYLCare MSA Program, NYLCare is the first national health benefits organization to offer MSAs as part of its small group indemnity plans, an aggressive move for a healthcare company to make on a national level given the unresolved status of MSAs (Congress as well as the IRS are still in a cautious wait-and-see mode where this legislation is concerned). MSA Program Gets Aggressive Direct Mail Support NYLCare is going full speed ahead with a national marketing strategy that primarily targets about 15,000 insurance producers and secondarily 10,000 New York Life (NYLCare's parent company) insurance agents and general agents or super brokers who represent multiple insurance companies. Although most insurance producers are familiar with the overall concept of MSAs, the marketing focus is on educating each target audience on NYLCare's distinctive national MSA advantage via direct mail. For mass reach and product introduction, a business print advertising plan is being considered for the fall. Marketing materials hone in on key program benefits - reduced insurance premiums, freedom of choice among licensed physician (open access), pre-tax employee premium contributions, tax savings, savings and investments, and the program's portability. In March, a pre-announcement letter went out explaining the fine points of the alliance between NYLCare and MSaver (Overland Park, Kan.). Subsequent mailings included more substantive sales materials or program "starter kits" that included glossy brochures, training videos, and enrollment materials for client presentations. Although Martin Rosen, NYLCare's senior vice president and chief marketing officer, declined to comment on what NYLCare's financial commitment is to the MSA program, (for launch and marketing support), Dr. Robin F. Potter, MSaver's CEO, said the deal is one of the most aggressive in the MSA marketplace (alluding to marketing figures being in the multiple six figures at this stage in the game). MSaver, which has 20 other healthcare clients and also owns PulseCard, a national healthcare transactions company, and Mayer Hoffman McCann, an accounting firm known for its expertise with premium-only plans for small businesses, has been trumpeting the merits of MSA programs for the past five years. For Rosen, the MSA Program isn't a "fly by the seat of your pants" marketing decision, but a shrewd move to capture market share in a new benefits arena (despite the lack of strong market research numbers to back up this hunch). "We had been watching the evolution of MSAs through Congress, the media and especially our brokers and insurance producers - who had a growing interest in MSA programs - and saw a real opportunity to add to our portfolio of product services and carve out a great niche for our small business community," said Rosen, who cites the program's main barrier as the federal "specialized cap" currently in place which limits the number of MSA contracts NYLCare can write to 750,000. MSAs, which were created under the Health Insurance Portability and Accountability Act by Congress, are similar to IRAs in that contributions are tax deductible (federally) and can earn income on a tax deferred basis. MSA Alliance Generates Industry Credibility and Exposure NYLCare defers to MSaver's PR expertise with generating ink on MSA topics and attracting targeted national media exposure from outlets like CNN and Forbes Magazine. Viewed as an MSA public advocate as well as database maintenance company, MSaver updates the public on legislative MSA issues and provides CPA tax advice via its toll-free information hotline, establishing the company as a respected industry resource on the future of MSA marketing trends. Although NYLCare has not established any contract goals, Rosen maintains the marketing thrust is on leading the pack in what is expected to be a huge healthcare benefits breakthrough, Dr. Potter anticipates that the NYLCare MSA Program could easily generate 5,000 members by year end. In the last 60 days the program has already signed up 500 to 1,000 members. (NYLCare Health Plans, Inc., 212/437-1553; MSaver Resources, 816/968-2040) Martin Rosen, SVP at NYLCare, views the program's main barrier as the federal "specialized cap" currently in place which limits the number of MSA contracts NYLCare can write to 750,000. A Look at MSAs MSA expansion into other markets like Medicare and large corporations is imminent, according to Dr. Robin F. Potter of MSaver. "It's not a matter of if anymore, it's a matter of when," said Potter, who is confident that that legislative restrictions will soon be lifted. Dr. Potter highlighted some key national stats that support the growing appeal of MSAs. 50% of employees don't exhaust their full deductible.94% of employees never reach $3,000 in claims. 80-85% anticipated savings for healthcare expenditures on claim filings.

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