If you're new to the world of HSA-qualified health plans, here's
a chance to get up to speed.
By Craig Keohan | February 07, 2020 at 07:38 PM
According to the Kaiser Family Foundation, the average annual premium for
employer-sponsored family health insurance coverage has risen over 50% in the
last 10 years. And in the same time frame, the average employee contribution to
that annual premium has increased over 70%.
As health insurance costs continue to rise,
employers are seeking out ways to provide high-quality care while also reining
in cost for employees. Many are turning to HSA-qualified health plans — plans
that allow eligible employees to open health savings accounts (HSAs) and save
money by paying for medical expenses tax-free. HSAs have more tax advantages
than a 401(k) and don’t have use-it-or-lose-it limits like a flexible spending
account, making them the best way to save for health care costs.
In addition, HSA-qualified plans typically
have lower monthly premiums than traditional plans. Rather than paying more
each month for coverage they may not utilize, HSA-qualified plans allow
employees to own their health and take a more active role in their medical
consumption. And employees are taking advantage; the 2019 Consumer Engagement in Health Care Survey found
that employees covered under HSA-qualified plans were more likely to check
medical prices, ask for generic drugs instead of brand names, and use online
cost-tracking tools.
For these reasons, employers are increasingly
encouraging their employees to enroll in HSA-qualified plans, open HSAs, and be
engaged health care consumers.
If you are already setting up
employer-sponsored HSA programs, you probably know all about strategies for
maximizing employee engagement.
If not, here are three things to tell employer
clients about how they can nudge employees onto HSA-qualified health plans:
1. Make
sure the health plan is HSA-qualified.
This might seem like a no-brainer, but it’s
worth mentioning. While the terms “high-deductible health plan” (HDHP) and
“HSA-qualified health plan” are often used interchangeably, not all HDHPs are
HSA-qualified plans. In fact, according to 2018 data from the National Center for Health Statistics, over 25% of
individuals with private health insurance were enrolled in HDHPs without an HSA
option.
Agents, don’t let this be your clients.
Offering employees an HDHP that isn’t HSA-qualified is like having a PB&J
without the bread: It’s messy and far less palatable. Your clients’ employees
will find it much easier to own their health if they can take advantage of the
unparalleled tax savings HSAs provide.
Once that’s covered, the next step is choosing
an HSA provider to partner with.
Clients will want their employees to make
their HSA contributions via pre-tax payroll withholding, so they’ll need to
have your HSA offering set up seamlessly, to make things easy.
2.
Contribute to employees’ HSAs
Not only do employers typically save money
when their employees enroll in HSA-qualified coverage, they can also save when
their employees make contributions. If your client sets an HSA offering up as
a Section 125 plan, both your client and the client’s
employees will save 7.65% on FICA taxes every time they contribute via pre-tax
payroll withholding.
By contributing into employees’ HSAs, your
client can prompt additional contributions from the employees. Everyone wins!
Both the client and the client’s employees get the FICA savings, and they build
tax-free funds to pay for their medical expenses.
Recommend that your employer client consider
separating the employee HSA contribution into tiers to prompt higher
contributions. For instance, your client could make an initial contribution
into all employees’ HSAs, then add a second contribution for employees who
contribute a certain amount. Or, your client can tie HSA contributions to the
employees completing wellness initiatives, giving the employees an incentive
towards healthy behaviors and potentially lower health insurance usage.
3. Empower
employees to be savvy health care consumers
We’ve already seen how employees on
HSA-qualified plans are more likely to shop for medical care and save money on
health care expenses. By providing them with simple price comparison and
cost-saving tools, your clients can make the employees’ lives easier and give
them the resources they need.
Companies like mine offer services that can
help the employees quickly compare medical prices and shave dollars off their
health care expenses. Tools like those can help the employees stay aware of the
basics of being a more engaged health care consumer.
The more money your employer clients’
employees can save on their medical expenses, the less they’ll have to pull out
of their HSAs to pay for them. This means more of their HSA funds can stay
growing for the future; the employees can even invest unused funds for
retirement the same way they do with a 401(k). By building a medical nest egg,
employees can give themselves peace of mind that they’re prepared for whatever
health care issues come their way in retirement.
HSA-qualified plans are a true win-win; they
save employers and employees money on monthly premiums and allow employees to
open HSAs and save on medical costs. By encouraging their employees towards
HSA-qualified plans, employers take a step in building a happy, healthy future
for themselves and their employees.
Craig Keohan is
chief revenue office at HealthSavings, a health savings account (HSA)
provider. He is also the chairman emeritus of the HSA Council at the
American Bankers Association. He has given in-person advice regarding HSA
improvement to former President George W. Bush and former presidential
candidate Newt Gingrich.
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