For more years than I care to remember, healthcare costs have increased. Scratch that – I’ve seen some costs stabilize from one year to the next, but I’ve never seen them decrease. So what do most employers providing coverage do with the increases? They pass them on to their employees.
To help manage rising costs, High Deductible Health Plans (HDHP), where one doesn’t have the traditional copays but instead bears the burden of the first few thousand dollars of medical expenses, were created. Health Savings Accounts (HSA) were also created to work in conjunction with HDHPs, allowing individuals to put aside pre-tax dollars in order to help pay for those medical expenses. They’re a great solution, right?
I took a look: today there are over 24 million HDHPs, and around 13 million HSAs open. That’s a lot of accounts. But wait – there’s a difference of 11 million accounts between the two, eleven million that are not taking advantage of the pre-tax savings. Why? The answer goes down a few paths, but they all lead to the need for more information and education, especially from the administrators of employer-sponsored plans. There’ve been studies done in the past few years that show there’s a basic misunderstanding of HSAs and how employers and employees can make the best of them. Some of the misunderstandings are basic, like how HDHPs and HSAs work together. Many also believe that the funds in an HSA would be lost if not used by the end of the year, when in reality, the funds roll over year after year. There’s no ‘use it or lose it’; the pre-tax funds that accrue in an HSA belong to the employee (not the employer) - they can be used well into the future for healthcare needs, and after a few years, can even be invested by the account holder. I like referring to HSAs as “Healthcare 401k” plans. Eleven million people – nearly half the number of those with HDHPs – need to catch up.
How? Education and information. It all comes down to education and information.
But when’s the best time to begin the process? Right now employees are getting their information near the end of the year when employers send out benefit enrollment information. Employees often don’t understand the overall value of the benefits being offered, and feel stressed knowing that the decision they make will be one they have to live with for the next year. Employers also feel the pressure, as they don’t have much wiggle room, as providers, plans and rates have already been chosen. So no one should be surprised that many employees go to their default position, which is to keep the plan they had the previous year.
But these pressure-packed days for both employers and employees can be avoided. Employers can easily change the dynamic by not limiting their discussion of benefits to the open enrollment period, and make it a year-long conversation. It’s relatively easy to do; solutions providers like us at The Bancorp have the tools to help employers, from ongoing training to posters to flyers to quick and easy calculators employees can use to compare plan options. The more time employers spend during the year helping prepare employees for the open enrollment period, the better.
I’ve seen the positive results of employers encouraging their employees to learn more about HSAs outside of the pressure-packed open enrollment period. HSAs can be difficult to understand; how the accounts work (no, they’re not savings accounts), how they can be funded, the tax advantages they can provide, and most important, how they work in conjunction with HDHPs, can take time. And time can help create a better-informed employee, who can make better decisions about their plan choice.
And get the spouses or significant others involved! Many employees are making healthcare decisions not only for themselves, but for a partner. Chances are, if the employee feels overwhelmed and pressured by the decision-making process, his or her partner is probably not getting a very clear picture of the options available to them. Our team has seen that hosting events like pizza parties, where the partners of employees are included, increases employee engagement and helps simplify the process.
So getting employees to make more educated decisions about their healthcare needs to be a year-long process. It all comes down to satisfying hunger – for information - and yes, sometimes for dinner, too.
The opinions, findings, or perspectives expressed in this content are those of the author and do not reflect the official policy or position of The Bancorp, Inc., its affiliates, or its or their employees.