A Small Company Approach— Experimenting with HSAs
By Susan L. Thomas
The East Bay Business Times
(From the October 14, 2005 print edition)
When you are a company such as CritterPix Inc., competition matters - and so does health insurance.
That's why Eddie Oliver, the two-year-old firm's chief operating officer, had to do a delicate dance when choosing the kind of health insurance to offer CritterPix's 11 full-time workers.
The San Rafael firm competes with the likes of Pixar Animation Studios and Dreamworks LLC in the lucrative animation industry and it is expecting significant growth, from the current 11 workers to 140 employees in the next year. The company intends to release its first digital animation film, "Ollie," a tale about a sea otter based on the children's book "Ollie the Otter," in fall 2007.
As a business, CritterPix's goal is both simple and big: Produce an animated film in two years for $35 million. The industry norm is more than triple that cost - $110 million plus - and more than double the production time - five years.
To do that, Oliver said the company must hire top talent while competing with much more monied competitors that offer very generous health care benefits. "It's a money-making industry, so everybody is hiring," Oliver said. "Our highest priority is getting the best-quality people.
"Some of our most important work is being done now."
Potential employees all put health insurance as one of their top concerns when considering employment, Oliver said. But being so small, the firm's options were somewhat limited.
So Oliver followed the advice of his insurance broker who suggested he offer a health savings account through Oakland's Sterling HSA, a health savings account administrator.
HSAs were first established in January 2004 after being passed into law in 2003 as part of the Medicare Prescription Drug, Improvement and Modernization Act.
The accounts let individuals save money - tax-free - to pay for health care expenses and are used in conjunction with high-deductible health plans. They are portable so workers can take the money with them if they leave their jobs, accumulating more money over time. HSAs are offered along with a high-deductible insurance plan, and CritterPix chose a Blue Cross Plan with a $2,000 deductible for an individual or $4,000 for a family.
The company also chose a more traditional Blue Cross preferred provider organization, or PPO, as an alternative.
"We were looking for the most we could get, but we didn't want to pay the highest cost," Oliver said. "We chose a balance."
CritterPix decided to try the newly created HSA option as a way to offer its workers choices they may not have through traditional insurance. "It gives you a little more freedom," Oliver said.
Employees, especially in California, like to see acupuncturists and other caregivers who may not be covered by health plans, Oliver added.
"A lot of our employees are going to be in their 30s and they don't go to the doctor (often)," Oliver said.
CritterPix pays the same amount in health insurance for each of its employees, regardless of whether they choose the PPO or high-deductible plan. It works like this: For a person age 30 to 39 in the PPO plan, CritterPix pays a basic premium of $283 a month. That's higher than the $196 the company pays for the high-deductible premium. So CritterPix puts the $87 difference into an employee's health savings account each month for use as the worker sees fit. The employee also can contribute monthly to the account.
New account holders may end up dipping into their pockets to cover expenses. On the other hand, any money not used continues rolling over and could eventually accumulate enough to cover an entire deductible.
So far, four CritterPix employees have chosen the HSA, and seven have opted for the traditional PPO plan, Oliver said. Those with families or those planning to have families and others who think they will use health care more frequently than healthy, single, childless employees have chosen the Blue Cross option, while others have gone the HSA route, Oliver said.
CritterPix's health insurance rates have risen a little more than 4 percent this year over last year. Employees who have chosen the HSA are satisfied and the paperwork associated with the accounts is simple, Oliver said.
The company still does not provide dental or vision insurance. As CritterPix grows, it will consider its options, perhaps including self-insuring dental and vision care. When the company reaches 40 employees, Oliver added, it will have more health insurance options to evaluate as well.
"We're not approaching it strictly by the numbers," Oliver said of cost considerations. "Part of our company's mission is not just to make good films but we also want to create a very supportive environment for the artists."
The reporter can be reached at slthomas@bizjournals.com or 925-598-1432.