Many employers will offer high-deductible health plans in 2017. Many of those plans will include health savings accounts—immensely valuable, tax-advantaged accounts designed to help employees save for healthcare expenses now and even build a nest egg for retirement in the future.
Unfortunately, this is where so many employers and benefits managers fail to bridge an awareness gap, often leading to apathy, if not disdain for HDHPs and the employers offering them.
HDHPs Becoming the De Facto Benefits Offering
In a recent Benefits PRO article, WEX Health’s Jeff Bakke shared important statistics about employers’ moves to high deductible health plans, and why pairing them with health savings accounts is a benefit rather than a detriment to employees.
Since the passing of healthcare reform, many employers and employees have moved to HDHPs to control premium costs while promoting smarter healthcare spending. Among the 2,500 companies surveyed by benefits consultant Mercer in 2015, 59 percent said that they offer an HDHP, up from 48 percent in 2014. By 2018, it is projected that three-quarters of companies will offer HDHPs.
According to the Kaiser Family Foundation, four percent of employees in 2006 were enrolled in employer-sponsored high-deductible plans; however, that number shot up to a quarter of employees in 2015, with about half of America’s “young invincibles” opting for these affordable premium plans.
Where Employers Go Wrong
However, focusing too much on cost control and not enough on education is where employers and their benefits departments get into trouble. In far too many cases, employers dig themselves a hole when positioning HDHPs with HSAs, committing the following error.
- Employer adds an HSA-qualified high-deductible plan “just to have one.”
- Employer provides too little or no employee education around the health plan and HSA.
- Employer apologizes for the high-deductible plan.
Apologizing for the HDHP is the most grievous error in offering the HDHP, as discussed in a recent SHRM article on HSAs and HDHPs, as apologizing creates the mentality among employees that employers made such a decision based only on cost, when often this is not the case.
Without proper communication and education prior to changing to an HDHP with HSA, employees become frustrated with their “reduced” health benefits, which can lead to disengagement, lower productivity and higher turnover. Additionally, it puts more stress on the benefits department, who has to answer for the decision reactively, rather than proactively.
How to Speak with Your Employees about HSAs Before and During Open Enrollment
Strategies include talking about the triple-tax advantages (deposits made pre-tax, money grows tax free, and can be used for qualifying expenses tax free), differentiating HSAs from flexible spending arrangements, and demonstrating the value of HSAs for those of all health statuses. For more, see a recent HTI article, Three Advantages of HSAs Your Employees Need to Know.
The SHRM article dug deeper into the strategies employers should embrace when positioning an HSA-qualified HDHP, noting the following:
Be Proactive—Talk HSA First, HDHP Second
One of the most effective ways to speak with your employees about HSAs is to cut to the chase. Before open enrollment even begins, work to position the shift to an HSA-qualified HDHP as an enhancement to your benefits program.
“It’s important to separate education about the account from the health plan and address the benefits of the HSA first,” said William Stuart of Benefit Strategies LLC. “When employees hear the words ‘high-deductible health plan,’ many shut down. When they’re educated about the benefits of an HSA first and then are introduced to the health plan as a means to take advantage of an HSA’s benefits, they’ll see this option with a more open mind.”
Position HSAs as an Opportunity to Win Financially in the Short- and Long-Term
Send the message that employees can win financially by enrolling in an HSA, Stuart said:
“Account holders can accumulate sizable balances if they use their HSAs strategically—a point that employers and HSA administrators need to make” by emphasizing that an HSA is a lifetime account with an opportunity to build long-term balances. “Tax savings also make an HSA plan more attractive, but those savings are icing on the cake, not the cake itself,” he said.
Ensure Employees Can Differentiate HSAs from FSAs
Among the seven types of HSA users, “Pass-Thrus” and “Spenders” often don’t take full advantage of their accounts. Both of these users understand some of the benefits of HSAs, but let account balances dwindle by the end of the year. It is important they understand that HSAs do not have the same “use it or lose it” nature of flexible spending arrangements, and balances can be used for qualified expenses this year, next year, or 30 years from now.
Contribute (Sweeten the Pot)
Employers who receive the highest HSA engagement are the ones who can demonstrate that they’re “passing on the savings” to employees.
“Employers need to pass on premium savings from adopting a high-deductible plan and make employee contributions to employees’ HSAs so that employees believe they’ll come out ahead if they enroll in the program,” Stuart said.
With HSA contribution amounts for 2017 set at $3,400 for individual coverage and $6,700 for family coverage, providing at least part of an employee’s total contribution (especially at the beginning of the year) can ease the employee’s concerns about the program, build trust among your workforce, and help employees to cover early-year medical expenses.
Make HSA Planning and Investment Part of a Larger Financial Wellness Initiative
Are your employees taking full advantage of their HSAs? Even if employees are putting money away, demonstrating the value of HSA investment is another part of the equation. By talking to employees about the flexibility of HSAs by comparing their utility to something more familiar like an IRA, employers can begin the conversation about creating a mentality of HSAs as part of a long term financial wellness initiative.
Learn more by watching our latest webcast, HSAs and Open Enrollment Planning.