America’s 1st Tax-Free HSAs
8 short weeks after President Clinton was tricked into including tax-free HSAs in the Federal HIPPA legislation I had a meeting on the 34th floor of the 7-Eleven Tower in Dallas in 1996. Back then tax-free HSAs were called tax-free MSAs and the top dog there loved them. Tom Kanoyer was the head guy over the 18,000 7-Eleven owners from coast to coast. I was showing him the state laws in the different states and picked Detroit Michigan as the example. I showed Tom that the MI law required the employee to pay 100% of the premium for low-cost personable, portable and permanent Individual Medical (IM) health insurance. I showed Tom the cost of a 30-year-old male in Detroit was $34 a month for the insurance. Tom was so smart he said, “Wait a second, are you saying that if the employee pays $34 a month the 7-Eleven owner can deposit $50 in his MSA at the bank? I said, “Exactly.” Tom said, “WOW, if the employee doesn’t take that deal we should fire him because we would have an IQ problem!”
BUT – Tom pretended he knew something and said, “We are going to wait until there is another competitor with a product so we can due our due diligence.” I am a salesperson and I knew that was just a common stall. Tom loved the tax-free MSA. Tom thought he knew something about insurance and nothing could be further from the truth. Tom said, “Maybe a competitor will pay a higher interest rate on the tax-free MSA.”
After waiting forever Golden Rule Insurance Company finally came out with their cheesy MSA Qualifying insurance in December of 1996. I circled the Dependent Termination Clause (DTC) and faxed to Tom with the message; Golden Rule terminates all sick children’s insurance at 19-years-old or when they stop being a Full-Time student. We have a Dependent Conversion Privilege (DCP) so all sick children can keep their insurance no questions asked. The last thing you want to do is recommend to 18,000 7-Eleven owners insurance that puts their children in danger. BAM, I got the sale. Tom wanted me to start in St. Louis because it was small and only had 143 7-Eleven owners and I arrived in January 1997.
At the meeting of 143 7-Eleven owners about half brought their insurance agents with them. So it was me against 70 local yocal insurance agents. A war broke out as soon as I started talking. All 70 of them stood up and started screaming and calling me a liar and insisted that there is no such thing as a tax-free savings account. So I decided to stick the dagger deep in these local insurance agents’ heart. These 7-Eleven owners live to sell their store someday because they are open 24/7/365. So I tell them they don’t want a small group insurance plan because even the owner has to work full time to keep their insurance. Which means that if they have a heart attack, cancer or stroke and want to sell their 7-Eleven they will lose their health insurance. These agents went crazy and I thought they were going to kill me. I decided right there to never do another group meeting with 7-Eleven owners and I never did. From that point forward we meet with them individually.
The 1st 7-Eleven owner to enroll was Mike Foster and he might be the smartest HSA client I ever enrolled. Mike was laughing at me and said, “I know how to read and my policy does exactly like you said.” So Mike enrolled and then Mike had a heart attack and then sold his 7-Eleven and kept his portable Individual Medical (IM) insurance. Mike followed doctor’s orders and quit smoking so his health insurance premiums dropped by 40%. So instead of Mike losing his health insurance when he sold his business his premiums plummeted.
I left St. Louis and next was Chicago where I enrolled an owner named Mariana who immediately was diagnosed with ovarian cancer. It took Mariana 4 long years of suffering before she died. She sold her business as well and kept her portable health insurance. I’m still friends with Mariana’s husband Charlie. I’m still friends with Mike Foster and we talked just last week.
When President Trump pays for your personal, portable and permanent Individual Medical (IM) insurance and deposits your excess age-based tax credit into your tax-free HSA you should take it. If you don’t take that deal we might be dealing with an IQ problem!