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Case Studies
- Affinity Health Savings Account
- Affinity Business Solutions: Morris Engineering
- Affinity Business Solutions: 1-800-GOT-JUNK
Case Study: Affinity Health Savings Account
While many NJ small businesses and consumers are familiar with flexible spending accounts for healthcare, these accounts have had their limitations. For example, many employees are not sure how much to budget, and feel as though they are throwing their hard earned money away due to "use it or lose it" rules.
A new product, the Health Savings Account (HSA), has now entered the New Jersey market and many small businesses, and their employees, are taking notice, such as Alexander & Richardson [A&R], an advertising agency based in Warren, and Laddey, Clark & Ryan, LLP, [LCR] a law firm in Sparta.
"We heard about HSAs from our insurance agent, read about them in the media and trade journals, but were having trouble sourcing a NJ bank that offered them at a decent rate of return," noted Robbin Dolan, legal administrator, LCR.
"One of our partners is a member of Affinity Federal Credit Union and received a flyer on their HSA program, so we quickly took advantage of it."
Also taking advantage of Affinity's HSA program is Peter Ferrigno, president & CEO of A&R, who said, "Health Savings Accounts give our employees relief from high medical insurance deductibles." Ferrigno first heard about the product from an employee who was working on marketing materials for Affinity.
An HSA is a federally tax-deductible and tax-free medical savings account. Unlike flexible savings plans in the past, there are no "use it or lose it" rules. Funds remain in the account year after year earning interest. Affinity's HSA currently offers a yields of 5.13% APY1. Employees can control their deposits and withdrawals, using money for current expenses or saving it for expenses down the road.
Both Ferrigno and Dolan noted that their companies struggled to cope with skyrocketing medical insurance costs year after year, which had to be passed on to their employees. Now, both companies can take advantage of lower cost, High Deductible Health Plans and supplement these deductibles with contributions to their employee's HSAs.
"The big driver was medical insurance costs that kept going up. It made it very hard for us to keep a low deductible," said Ferrigno. "This is a wonderful employee benefit because it gives employees the opportunity to pay for medical expenses with tax-deferred dollars."
Alexander & Richardson employee Valerie Fedun, who suggested the HSA, said, "We need it, it's flexible, I get a great return on my money, and it's portable so if I leave my job I can take it with me. It's a no-brainer!"
Dolan noted that the plan's high rate of return was a large factor in the company's decision. She also noted that LCR's employees gave the company good feedback on the plan. "The response from employees has been good. Our agent and Affinity personnel explained it to our employees, and said this is where health insurance is headed, so they understood the need and benefits."
While many employers and health insurance companies have started to offer HSAs, consumers do not realize that they are not required to use them and have the option of establishing their own HSA. And, unlike many HSAs currently on the market, Affinity's has zero fees. This means there is no account opening fee, no monthly maintenance fee, no annual fee, no minimum balance, no account closing fee, and no debit card usage or check writing fees.
HSAs also help consumers to save on their federal taxes. Contributions are tax-deductible, and interest and withdrawals are tax-free. For 2008, members may contribute up to $2,900 if they have self-only coverage and $5,800 if they have family coverage.
Affinity has endeavored to make their HSA flexible and easy to use. For example, when a member needs to pay a medical bill, they can pay by check, use the Affinity HSA Visa check card, withdraw cash via ATM or branch, or use online bill pay.
1 Consult a tax advisor for tax implications. Annual Percentage Yield effective as of February 8, 2007.
Case Study: Affinity Business Solutions, Morris Engineering
Have you ever tried to start your own company while you're still working another job? You are working two jobs at once and it can be draining.
For Steve Morris, owner of Somerville-based Morris Engineering, the challenge of getting his firm off the ground required the help of someone who would go above and beyond what was expected. And he found that kind of support at Affinity Federal Credit Union.
"Affinity did a lot of the legwork for me," Morris said. "They packaged a lot of what I needed as far as insurance and some of the financing."
Did that level of service surprise Morris?
"No, but only because my wife works for an architect that had done business with Affinity," Morris said. "My wife told the Affinity representative what I was thinking of doing, and then we had a brief meeting to learn about their services. After that, I sort of expected great service, but I didn't realize it would work out so well."
Bob Birkhahn, Affinity Business Solutions, said the key to getting Morris Engineering off the ground was the right combination of planning and financial support.
"We helped him with his business plan, and he was able to leave his previous job and start his firm based on the business plan we helped him with," Birkhahn said. "We also helped him get a home equity line of credit to finance the business, as well as insurance and credit cards with Affinity."
Morris is grateful to Affinity for pulling it all together.
"The key was the integration of all the services they provided. We had a single point of contact who became the quarterback, making sure people responded, and got the information back to me," Morris said. "All those things kept rolling even when I couldn't be working on it full-time, because I was still employed elsewhere."
Morris Engineering opened in January 2008, and is off to a strong start. And Steve Morris is so pleased with Affinity's help, he is spreading the word.
"A friend of mine is starting a business, and I told him he needs to get in touch with Affinity, which he has," Morris said.
About Morris Engineering, LLC
Morris Engineering, LLC provides Forensic Engineering services to commercial and residential property owners to help them address issues such as roof leaks and deteriorated pavement. Morris Engineering also provides expert services to law firms and insurance companies.
Case Study: Affinity Business Solutions, 1-800-GOT-JUNK
Jim Barrett may not have had years of business experience when he decided to begin operating New Jersey's first 1-800-GOT-JUNK franchise. But he had the know-how and a good plan, and needed a financial institution to recognize the value of those strengths.
Affinity Federal Credit Union fit the bill. And that came as no surprise to Barrett.
"I'd been an Affinity member for some 24 years," Barrett said. "I'd looked at some other institutions in terms of truck loans, but Affinity looked at the business plan and they saw the opportunities."
The franchise launched in June 2006, and has enjoyed a successful first two years.
While Barrett had the money to buy his franchise, he needed financing help to secure his first two trucks. Many other financial institutions indicated they would require at least two years in business before they would finance the truck purchases. Affinity took a different approach.
"They did some internal research on the company itself, which is headquartered in Vancouver," Barrett said. "1-800-GOT-JUNK has been franchising since 1997, so Affinity was able to gather some history on this business model and use it for their assessment, even though we were the first franchise to start here in New Jersey. They saw the opportunity, and it's been a win-win for everybody."
Barrett's initial fleet of two trucks has now grown to six, and he is looking to avail himself of some other Affinity services, including insurance and financial seminars to benefit his employees.
"We're all about relationships," said Bob Birkhahn, Affinity Business Solutions. "So when somebody comes to us with one problem, we look at the big picture and see if we can help them in a broader sense and that philosophy has helped create many win-wins."
Barrett said he is particularly proud of the way Affinity has subsequently helped neighboring 1-800-GOT-JUNK franchises, who had the same solid business plans but not the longstanding relationship he had with Affinity.
