Cargill and Wells Fargo launch Harvest Health, a program that pays farm families up to $5,450 a year to fund a Health Savings Account, in exchange for a commitment to sell Cargill a portion of corn, soybeans or wheat.
This is the privately-held agribusiness giant's latest strategic effort to help farmers prosper and address a demonstrated need - rising farmer healthcare costs - while improving its own logistics and building a more predictable grain supply.
Harvest Health will give farm families the opportunity to more closely manage their own healthcare spending, control their health insurance premiums, and set aside tax-favored dollars for future medical expenses, say company officials.
"Our farm customers have told us rising health care costs are one of the biggest concerns they have facing their business," says Dean Grossman, Vice President of sales and Marketing for Cargill. "Premium costs have risen by 59% since 2000."
Farm families begin by buying a qualifying high-deductible health insurance policy, either through their own agents or through Cargill's partner, eHealth (www.cargillHSA.com). According to Cargill surveys, 35% of farm families already have a high-deductible plan.
And those plans can save money says Mark Tracy, assistant vice president, Cargill Risk Management. A typical
Next, families set aside money to pay the deductible in a tax-exempt Health Savings Account. HSAs were introduced by the federal government in 2003 as a tax advantaged way to pay for qualified medical costs.
Participants can withdraw funds at any time tax-free to pay eligible medical expenses. Like an IRA or 401(k), any earnings or unused balances can grow tax-free year after year and be used for medical expenses later in life. Federal limits are $5,450 for families and $2,700 for individuals. Farmers can also set up HSAs for employees and it could be used as an incentive to attract employees, say Cargill officials.
The more grain a farmer pledges to sell to Cargill, the more money the company will contribute to the individual's HSA. There is no minimum bushel commitment; maximum volume is capped at 25% of total production for corn, wheat and soybeans.
A family of five, for example, may choose a health plan with a $2,500 deductible, resulting in a lower monthly premium compared to low-deductible plans. Once their Wells Fargo HSA has been established, the family decides to fund the account for the entire amount of the deductible.
The specific market value of the commitment changes based on the daily fluctuation of commodity prices, but under this example, in exchange for committing 25,000 bushels of corn to Cargill at a maximum price of $2.50 per bushel, Cargill deposits $2,500 into the family's HSA account.
Those funds go into the account within 10 business days of the commitment, while the grain futures commitment matures at a later date. Those funds are 'no-strings-attached,' and can be used for any qualified medical expense. Unused account balances roll over from year to year and grow tax-free.
"This is the latest in a line of programs designed to help farmers manage the volatility in their business," says David Feider, director of media relations for Cargill. "Health care is one of those areas farmer customers have been citing as a challenge for many years."
Meanwhile, Cargill hopes to build sales volume and plan ahead, he adds. "If we know that next October you are going to be delivering 10,000 bushels of corn to our
"That grain commitment has a value, and we're sharing that value in the form of funding a farmer's personal health savings account."
Harvest Health is available in the 18 states with Cargill AgHorizons grain elevator locations. To participate a farmer must be able to feasibly deliver grain. Contact Cargill (www.Cargillhsa.com) for more information.