As the cost of traditional group health insurance has gone up, high deductible health plans (HDHPs) with tax-advantaged health savings accounts (HSAs) have become increasingly popular among employers of all sizes. But offering a HDHP is only helpful if employees, assuming they’re given a choice, then choose to adopt them. And employees who are most satisfied with HDHPs are the ones who make the most of a HDHP’s best feature, the HSA.
HSAs (which are only available with a qualifying HDHP) are primarily designed to help employees offset the high out-of-pocket costs which come along with HDHPs by allowing both employers and employees to contribute dollars into a special savings account. (Employee contributions are made on a pretax basis.) Because HSA funds roll-over and can eventually be converted into retirement savings, savvy employees have quickly learned how to take advantage of these accounts and those who can afford it are maximizing this benefit to the full extent of the contribution limits, which currently stand at $3,400 for an individual and $6,750 for a family.
That said, the average HSA participant can’t afford to max out this benefit. In fact, most HSA participants barely contribute enough to the HSA to cover their anticipated out-of-pocket medical costs for the year. The average individual contribution is just $833, far less than any deductible on a HDHP, thereby causing enrollees to suffer under the weight of this type of plan design. Some of this behavior is simply due to limited incomes, but some can be attributed to other factors, such as a lack of education on how an HSA works.
To ensure that your workforce fully embraces HDHPs with HSA plans, it behooves every employer to explore ways to motivate employees to participate in their HSA. Afterall, according to the Employee Benefit Research Institute, between 20 and 22 million people in the U.S. are currently enrolled in an HDHP with an HSA.
Here are just a few ideas for improving HSA participation:
As with any employee benefits-related offering, it’s important to communicate the ins and outs of HSAs with your employees. Let them know who is eligible to participate in the HSA, as well as which plans work with an HSA and which do not (assuming you, as an employer, offer a choice of plans). Be sure to provide them with clear and concise written documentation they can refer to when discussing the plans with a spouse or family member.
One of the most important points to cover is that HSAs are portable (meaning they can keep the account even if they switch jobs or retire). HSAs also allow participants to use pre-tax dollars to pay for qualifying medical expenses, effectively allowing those dollars to go about 30% further.
Any dollars that go unused stay in the account, where they can eventually be rolled over to retirement savings. This benefit can be very helpful for seniors, as medical expenses are likely to be higher during retirement, when incomes are fixed. With the average social security benefit being just $1,342 a month (about $16,100 per year), having an HSA to help supplement income could prove to be lifesaving for some — and with fewer companies offering pensions, today’s workers need extra retirement benefits to see them through their golden years.
Although HSAs are owned by the individual employee, employers are able to contribute as well. In fact, this is one of the best ways to motivate employees to participate in an HSA, as no one wants to leave free money on the table, so to speak. Since HDHPs have the unfortunate side effect of shifting healthcare costs onto employees, which can be understandably frustrating for members of the workforce, contributing to an employee’s HSA is an excellent way to provide added value.
According to the Kaiser Family Foundation, “A large share [of employers] now offer health screening programs including risk assessments, which are questionnaires asking employees about lifestyle, stress or physical health, and in-person examinations such as biometric screenings. Many employers have incentive programs that reward or penalize employees for completing assessments, participating in wellness programs, or meeting biometric outcomes.”
As we all know from school, there are many different types of learners. No matter what type of industry you’re in, your employees are likely a mix of visual, auditory and kinesthetic learning types. Here’s a quick guide to the top traits for each type:
The good news is you can reach all three types by using real world examples of how an HSA operates. Create a few different medical scenarios in which an individual (and then a family) experience various health care situations, from basic preventative care to hospitalization to something chronic. Draw up charts and diagrams that compare medical treatment costs for group health insurance from a more traditional plan versus coverage through an HDHP with HSA. In other words, tell this employee’s story, show how it unfolds, and let your employees see how the HSA works or doesn’t work depending on the scenario.
HSAs are an important tool to help employees offset the high deductibles which come with HDHPs. Enrollees who know how to use HSAs to their maximum potential can become very savvy consumers of healthcare and very savvy savers. Obviously, what motivates some employees may not motivate others, which is why it’s important to deploy at least a couple of different techniques, many of which have been cited here.
If you’re still struggling to get your workforce to enroll in HSAs, create an anonymous survey (through something like SurveyMonkey) and ask what would motivate employees to participate. Perhaps they have ideas you haven’t thought of or you'll gain insight as to why they’re reluctant. It might also point out knowledge and perception gaps — and, if you’re lucky and craft the questionnaire in just the right way, the survey itself might help to educate your employees on HSAs.
How do you motivate your employees to participate in their HSAs? Leave us a comment below or contact us. We’d love to hear what’s working for you!