Patricia Timmons can’t afford to offer health insurance to the 12 employees of her water-treatment company — it’s just too expensive. But, she is able to pay for each employee to have a health card to help defray their medical and insurance costs.
Since January, Timmons, president of US Water Systems in Indianapolis, has been depositing about $120 per month into each worker’s health account, which is linked to a debit card that the employee can use at doctors’ offices, hospitals, and pharmacies, as well as to cover co-pays and deductibles.
“Our employees really like it,” says Timmons. “It isn’t health insurance, but it helps… About half our employees have little kids, and they get sick a lot.” Timmons pays the $5-per-card monthly debit card maintenance fee for her employees, so that they have no out-of-pocket expenses.
Timmons uses Intuit’s Health Debit Card service and pays the $5-per-card monthly maintenance fee for her employees, so that they have no out-of-pocket expenses.
Employees can roll over savings from year to year, but can’t take it with them when they leave the company. They also can’t spend more than is in their accounts.
Cards like Timmons is using are not the same as medical credit cards. These cards, such as GE’s CareCredit and Citi’s Health Card, let users charge health care expenses interest-free for a certain period of time, usually three or six months. If the user can’t pay off the balance by then, interest rates start to apply — and that’s when the trouble begins.
Melissa Whittaker is a consumer credit educator in Georgia who herself got into trouble with GE’s card when, as a “dumb college student,” she needed her wisdom teeth extracted. She charged the bill using a health credit card, then didn’t pay it off during the no-interest period — and wound up spending far more than she expected in high interest rates. This is why medical credit cards are frowned upon by credit counselors: it’s too easy to wind up in debt.
“I favor the cards attached to flexible spending accounts and health savings accounts more than medical credit card plans because there is less of a chance for people to dig themselves into a huge financial hole,” says Ciro J. Giue, agency development manager for Colonial Life in Kinnelon, New Jersey. This simple feature, says Whittaker, makes health debit cards “a healthier option than the health care credit cards.”