MINNEAPOLIS -- Farm families have a new option for covering their medical bills -- let agribusiness giant Cargill Inc. help pay them.
Cargill rolls out a program today with Wells Fargo & Co. in which Cargill will put money into farmers' health savings accounts (HSAs) in exchange for pledging to sell Cargill a certain portion of their corn, soybean or wheat crops.
Minnetonka-based Cargill says its Harvest Health program gives farm families a new way to control their rising health care costs, while the company benefits from getting a more predictable supply of grain.
Cargill officials said they decided to launch the program because they kept hearing from farmers that they were being squeezed by escalating medical and insurance expenses.
"We need our farmer-customers to do well for us to prosper in turn," said Mark Tracy, an assistant vice president in Cargill's Risk Management business.
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Participants will first sign up for tax-exempt HSAs through Wells Fargo and for high-deductible health plans (HDHPs), either through a Cargill online partnership or their local insurance agent. A qualifying HDHP might have a $2,500 deductible for a family policy, but a customer could choose one with a higher deductible and lower premiums, or vice versa.
Farmers would also decide how much money they wanted Cargill to put into their HSAs, and then work with the company to figure out how much of their next harvest they'd have to pledge for that.
The mechanism for that is complicated but will be familiar to farmers who sell their grain on the futures markets. Farmers sell futures to lock in a guaranteed price rather than take the risk that crop prices will fall.
For example, a farmer participating in Harvest Health might contract now to sell Cargill 11,000 bushels of corn for fall delivery at a maximum target price of $2.60 a bushel.
They'd receive $28,600 for the grain at harvest -- but Cargill would put $1,000 into the farmer's HSA within five to 10 business days.
The farmer could then use that money immediately to pay health care expenses that fall under his or her insurance policy's deductible, or let it build up and earn interest in the HSA tax-free to cover future medical bills.
Cargill will contribute up to the legal maximum of $5,450 for a family and $2,700 for individuals, though it will cap the amount of grain for which it will contract at 25 percent of a farmer's total crop. The minimum grain contribution to participate is 3,000 bushels.
Harvest Health is available today in 18 states where Cargill's AgHorizons marketing assistance unit has a presence: Arkansas, Colorado, Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Missouri, Nebraska, New Mexico, North Dakota, Ohio, Oklahoma, Tennessee, Texas and South Dakota.
