Why aren’t more employees selecting health savings accounts? Many human resource teams work diligently with their benefit brokers to offer a thoughtfully crafted HSA with at least one of their health plan options, only to be disappointed in the final enrollment numbers. They are left scratching their heads when faced with lower-than-expected employee selection. When the HSA should be the clear winner compared to the traditional, more expensive health plan options, what more can an employer do to help employees shift to an HSA?
Most employers design an HSA offering in which the combination of an employee’s premium contribution for the high-deductible health plan plus any employer contributions to the HSA creates an offering for employees that is more attractive than the employer’s next best health plan choice.
A lower employee contribution for the HDHP premium will immediately grab the attention of most employees, and then most will calculate whether the annual savings in premium will cover the HDHP’s deductible exposure for the year. It is essential to consider your employee demographic as you create your financial package for the HSA, considering average family income as well as their financial and health care literacy. A “lower” employee contribution to premium should be relatively lower than other employee premiums associated with plans you offer and should consider this employee demographic.
If the 12 months of premium savings do not outweigh the higher-deductible liability and the HSA tax savings do not convince a worker to choose the HDHP with an HSA, an employer HSA contribution could help sway hesitant employees. Although the intent is not to have the combination of the lower worker premium and the employer contribution fully pay for all out-of-pocket costs for the worker, the HSA’s overall financial package must look better than the employer’s next best plan offering and give the employee a reason to give the HSA a closer look.
Assuming worker contributions to the HSA premium are lower compared to your other health plan offerings and you’re already incenting workers with an employer HSA contribution, here are three additional ways to help nudge workers into a health plan that features an HSA.
1. Make the account-opening and contribution processes easy. Sometimes workers shy away from their employer’s HSA option because they are confused or don’t want to spend much effort opening an account. “Too much work,” they will argue.
The good news is that the HSA industry has come a long way to make opening accounts easy, and the IRS allows employerplan sponsors to help streamline the account-opening and contribution processes without triggering regulatory issues. Employers can choose a single HSA provider for their workers. This comes with certain advantages: Employers can pay any HSA-related fees for workers. Employers also can establish cafeteria plans for workers to contribute to their HSA via payroll deduction (which allows employer and worker savings on FICA and FUTA taxes).
Employers also can help their workers maximize savings for future health care needs by selecting investment options offered by the HSA — and even match what is offered in their 401(k) — without placing the burden on the worker. An employer can create easy on-ramps for workers to open and contribute to their HSAs and help workers maximize their HSA investments. Employers should promote this ease during the enrollment process.
2. Personalize your education efforts. Sometimes a one-on-one session is all it takes to help someone on the bubble decide to opt in to a health plan with an HSA. Brokers can work with their employer clients to conduct one-on-one sessions during paid work time through Zoom or a private on-site area over a few days. Any broker with experience implementing HSAs has answered almost every possible question about them. Brokers can inspire confidence in the program and help maintain the privacy required for workers to share their family’s financial and health circumstances to determine how an HSA might work for them.
Making it easy for employees, or their adult dependents, to quickly understand the advantages of an HSA can go a long way to encouraging enrollment in such plans. Additionally, if employer contributions to the HSA are part of the benefit offering, make sure enrollment education highlights the fact that these contributions can be saved or used in many ways today and in the future. Videos or meetings featuring employee testimonials and links to resources to help employees in their native language also may be helpful.
3. Provide access to funds. Not all employers can afford to make contributions to their workers’ HSAs in addition to bearing the cost of sponsoring a health plan. For those that can, most brokers would agree that employer contributions move the needle on enrollment. For those employers that make no or low contributions to the HSA, it may be worth adding a financial security benefit to assist workers with payment and management of their out-of-pocket health care costs before they have funds in their HSA.
One common employee fear is that their family will experience a large-scale medical event early in the plan year that they didn’t anticipate and cannot afford — at least not without having additional time to save. Employees are rightfully fearful about how they will pay their share of a potentially large health care bill under an HDHP design.
The need for creative benefits to buffer employees from unexpected health care expenses has never been more important. New financial security benefit programs in the market complement HDHPs that allow employees additional time for repayment on consumer-friendly terms.
HSAs continue to carry the torch for consumerism. When individuals have greater financial skin in the game, they are more likely to be engaged in their own health care choices. This has a positive effect on long-term outcomes and overall spending. HSAs can be an excellent offering — superior to traditional health plan designs — for both employers and employees. It is worth the additional effort to make sure that employees understand the advantages of an HSA and that an employee’s transition to an HSA is as simple and as de-risked as possible.
HealthBridge Mention in the Article
Amy O'Meara Chambers, JD
Chief Operating Officer