Finally, the Wait Is Over. MaxHSA Launches!
By William G. Stuart | Originally posted on Health Savings Academy
I have spent the past two years working on a project that came to fruition a month ago with a soft launch. Now, as we launch our app with our first financial-institution ally and commence online advertising to reach our retail audience, it is time to introduce the Health Savings Account world to MaxHSA.
The Issue That MaxHSA Addresses
The average Health Savings Account has a balance of about $3,200 (or about $4,000 if we exclude the 20% or so of accounts that have zero balance in semi-annual surveys). What this statistic does not reflect is that half of all accounts have balances less than $500 at any given time. That does not mean that owners are not benefiting from their Health Savings Accounts. It is quite possible that an owner with a $350 account balance has contributed $3,000 and paid $2,650 in qualified expenses, resulting in tax savings of $750. However, the fact that half the accounts have balances of less than $500 means that too many Health Savings Account owners do not have adequate balances set aside to pay for an MRI, emergency-department visit, diagnostic colonoscopy, or inpatient service that is applied to the deductible.
Health Savings Accounts are a tremendous financial opportunity. In the aggregate, 42 million accounts contain more than $150 billion in assets. That's $150 billion that Americans have saved for future qualified medical expenses, including Medicare premiums and cost sharing in retirement. The aggregate is meaningless to an individual Health Savings Account owner, however. What matters is her balance - the amount of money that she has saved in her account to manage her or her family's qualified health-related expenses. That's where MaxHSA aims to make a difference.
Recalibration
MaxHSA started two years ago with an idea - to build a Health Savings Account learning system. An industry colleague and the MaxHSA founder, Sanders McConnell, believed that a more educated account owner would naturally contribute more. He brought me into his dream to build the content of a learning system. We envisioned distribution through benefits advisors and employers. We imagined teams of employees competing for medallions as they mastered the material and became aware of the full power of their Health Savings Account.
Then, we presented the idea (then tentatively branded HSA Co-Pilot) to potential superfans of the concept and felt the cold wind of uncomfortable feedback slap us in the face. Our choice was to continue and likely fail, or pivot to provide a different value proposition.
Our superfans are primarily (but not exclusively) between the ages of 25 and 40. More are married than single, though marital status is not a relevant factor. Household incomes ranged from $50,000 to about $120,000. They are financially literate, use financial apps, and accumulate rewards on credit cards. They all told us of the money pressures they are facing: saving for a home or growing into a mortgage, paying off student loans or saving for a child's education, putting aside money for retirement, and building an emergency fund.
They said they want to contribute more to their Health Savings Account. They understand the value of triple tax savings and managing current and future health-related expenses. What they really need, they told us, is a new source of contributions that does not reduce their take-home pay (as additional pre-tax payroll deductions would). They told us that they do not need or want a learning system, though they want to learn new tricks and to have access to real-time answers to specific questions.
Based on this feedback, we scrapped much of what we had conceived and instead focused on building an app to meet their needs. And we changed the name to MaxHSA to more accurately represent what our app does: help Health Savings Account owners maximize the value of their account.