Employee Benefits Blog

As employee benefits consultants, we take our responsibility seriously to educate employers and employees on resources available to help reduce employee benefits program costs and out-of-pocket healthcare expenses.

This is especially true for those enrolled in High Deductible Health Plans (HDHPs), but even for those who aren’t. For without any effort, as a collective, to become more price-conscious consumers, healthcare providers will have no reason to reign things in.

In a recent blog, we discussed how consumers can save on prescription medications, including comparison shopping, manufacturer rebates and discounts, drug substitution, pill splitting, bulk buying, mail-order, and more.

As a complement to that blog post, today we’ll discuss various ways consumers can save on healthcare services and procedures. After all, when combined, hospitals and physician/clinical services account for 48% of healthcare expenses.

With nearly half of medical expenses centered around these areas, it makes sense for healthcare consumers to focus on these cost centers as target-rich environments for possible savings.

With the rising cost of health insurance, many consumers are opting for high deductible health plans (HDHPs) to keep their medical premiums affordable, especially when they’re relatively young, comparatively healthy, and don't spend much of their budget each year visiting a doctor. However, many people enrolled in qualified HDHPs are disappointed to learn they can no longer, by law, participate in a traditional flexible spending account (FSA). 

The nature of how these plans are designed leaves some wondering how they’ll cover all the expenses incurred prior to reaching their deductible, which has led to the rise of health savings accounts (HSAs) and limited purpose flexible spending accounts (LPFSAs).

Only those enrolled in qualified HDHPs are eligible to open an HSA and reap the tax benefits, but many are unaware that they’re also eligible to open a limited purpose FSA (providing their employer offers one), which frees up the money in their HSA for future use — even retirement. 

What Is a Limited Purpose FSA?

HSAs are usually a major selling point of HDHPs. They allow participants to set aside a portion of their income from each paycheck in order to pay for qualifying healthcare expenses. Limited purpose FSAs are like HSAs in that participants can contribute a specific amount from each paycheck. LPFSAs are like traditional FSAs in that they make funds available immediately, rather than forcing you to wait until enough money has accumulated to access the money you need for necessary vision and dental care (whereas HSAs require funds to be in the account before reimbursement can occur).  

Recent news that the rising cost of healthcare in America may actually be slowing is being met with resounding elation by those looking for ways to save money on their medical insurance. For those with high deductible health plans (HDHPs) and other forms of consumer-driven healthcare, this comes as especially welcome news.

If sustained, this tempering of rising medical care costs will hopefully begin to curb an alarming trend, that being dangerous cost-avoidance practices by some covered individuals, which sometimes includes such dangerous practices as skipping medications and postponing necessary medical procedures. (Many have also skipped out on preventative care, despite the fact that most all of it is covered at 100%.)  While in the short-term such actions will indeed bring down healthcare expenses, they are likely to trigger larger problems later on, which cost far more money.

There are much safer and more effective ways to curb healthcare expenses, but it takes a bit of effort and education to capitalize on them. Here are just a few we’ve found. Please feel free to use these money saving strategies with your workforce — and better yet — try them out yourself.

Editor's Note: This post is a follow-up to one of our most popular blog posts, "3 Great TED Talks in The Era of Consumer-Driven Healthcare (CDHC)". This post features new Ted Talks for fans of our past article to enjoy.

When it comes to the decisions we make, it can sometimes feel like we are strangers in a strange land. Our motivations are often a mystery to us. But researchers in the world of behavioral economics are able to give us some insight into what informs our decision-making and why it often defies logic.

Over the years, there have been some incredibly useful TED Talks that can help us better understand the human mind and the motivations that drive our decisions. As an employer who must consider the decision-making process of your employees, you too can gain some important insights that can help guide you in creating more effective employee benefits packages.

Here are five TED Talks which we consider to be some of the very best on this subject:

Let’s face it, healthcare has become a major expense for everyone in this country. To help offset a portion of this costly burden for employees, employers typically offer two very popular tax-advantaged savings accounts: HRAs and HSAs. But what’s the difference between these two healthcare savings plans, what are the legal distinctions, and which is better for your employees and your company?

Making an informed decision about these tax-advantaged reimbursement plans can help you maximize the benefits for both your employees and your company.

(For a side-by-side comparison of these plans, including comparisons to FSAs and QSEHRA tax-advantaged accounts, click here to download our four page guide.)

Defining HRAs and HSAs

Not to be confused with a flexible spending account (FSA), an HSA, or health savings account, is a savings account specifically linked to a qualified high deductible health plan (HDHP); it’s meant to help offset the higher out-of-pocket expenses that potentially come with plans of this design.

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:

3 Great TED Talks in The Era of Consumer-Driven Healthcare (CDHC)

Initial indicators suggest that consumer-directed health plans are indeed succeeding on several fronts; primary care engagement is up, trips to the emergency room are down, health savings account (HSA) balances are rising, and most importantly, health care spending is falling by 5 to 14 percent. But there's a big roadblock to CDHC / CDHP adoption: rampant consumer confusion.

That was the chief point from Harry Gottlieb, during a keynote address last Wednesday at the Human Resource Executive Health and Benefits Leadership Conference.

At least two of the pitfalls with Consumer-Driven Health Care (CDHP) and Consumer-Driven Health Plans (CDHP) are the rampant growth in options and the fundamental belief that humans make intuitive, rational decisions. If only that were true!

So what can we do about it? Fortunately, there are a multitude of behavioral studies to help guide our understanding of this phenomenon, as well as lay out a roadmap for us to follow to facilitate better decision making.

Here are what we, as the JP Griffin Group, consider to be three of the most relevant, informative and actionable TED Talks on audience segmentation, behavioral economics and the cognitive limitations of humans when faced with choice.

#1) "Choice, Happiness and Spaghetti Sauce", by Malcolm Gladwell

Struggling to find the perfect medical plan and perfectly optimized employee benefits portfolio for your entire work force? This TED Talk makes the case that we are not one homogenous group of consumers, no matter what the category for consideration, be it coffee, soda, healthcare, financial services and even spaghetti sauce. The concept is presented in a highly entertaining fashion by one of the best storytellers of our day, Malcolm Gladwell, author of such best selling books as Outliers, The Tipping Point, Blink and other works that focus on the unpredictable things that people do in the course of their normal lives. Gladwell sets out to explain how a guy by the name of Howard Moskowitz reinvented tomato sauce – a challenge given to him by the Campbell Soup Company when he was asked to create the “perfect” sauce.