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Three Ways for Employees & Employers to Save Money on Healthcare

David Rook

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.

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Topics: Employee Benefits, Consumer Driven Healthcare, cost management, CHRO, CFO, employers, HSAs, FSAs

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10 Pitfalls to Avoid This Open Enrollment Season

David Rook

For many who work in human resources and employee benefits, open enrollment can be a stressful time of year. Focused on meeting tight deadlines and pleasing multiple stakeholders, many HR professionals often repeat sins of the past and fail to make annual, incremental improvements in their open enrollment processes.

Optimizing your open enrollment is critical to ensuring its ongoing success. After all, over time you learn more about how best to communicate with your organization, particularly as the employee benefits space evolves i.e. new benefit products and services, and new technologies.

In the spirit of continuous improvement, whether you're working off of a well-established checklist or with your employee benefits broker, be sure to avoid these common pitfalls during your next open enrollment.  

1. Ending Open Enrollment Outside of Normal Office Hours

Procrastinating employees will inevitably have last minute questions and may experience technology troubles. Make sure your deadline for open enrollment falls during the workweek and during normal office hours when your HR staff is still on duty to help them through those final steps in the process.

2. Ignoring Other Household Decision Makers

Often times your employee is not the only one weighing-in on benefit decisions. Make sure the communication materials and media channels you're using reach other heads of household and key decision makers such as spouses. Consider extending invitations to open enrollment meetings to the entire family.

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Topics: Employee Engagement, HSAs, HDHPs, open enrollment

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Why Your Employees Aren’t Enrolling In Your HDHP

Jeff Griffin

Employers looking to decrease their healthcare costs often rely on workforce adoption of High Deductible Health Plans (HDHPs), which offer both employers and employees lower premiums. Unfortunately, this strategy doesn’t always work out if enrollment in HDHPs (assuming employees are given a choice) fall short of forecasts.

Rightly or wrongly, HDHPs have been saddled with some baggage. Many people have difficulty making the cognitive leap from traditional healthcare plans to HDHPs for a variety of reasons; in part because change is generally difficult for people, but sometimes, it’s simply a fear of the unknown and a matter of not understanding how they work.

While we certainly aren’t advocating that HDHPs are suitable for everyone, they’re a great fit for some — especially those who are otherwise overpaying for health insurance, meaning that they’re paying high premiums, but rarely using their plans.

Here are some reasons your employees might not be enrolling in your HDHP — and how you can overcome them.

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Topics: High Deductible Health Plans, HSAs, Cost Containment, Education

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Retirement Savings Options: Are HSAs better than 401(k)s?

David Rook

Retirement savings are on everyone’s mind these days, regardless of age or number of years in the workforce. Millennials are concerned they’ll never be able to retire, while baby boomers are choosing to delay retirement — in part because of employer demand for their expertise in the face of a low unemployment rate, but also because many of them haven’t sufficiently saved for retirement. In fact, according to Time’s Money division, 28 percent of boomers and seniors aged 55 and older don’t have any retirement savings whatsoever and just over half have less than $50,000 saved.

Even more surprising, the median amount Americans have saved for retirement is just $5,000, which means we have a long way to go in helping people prepare for their golden years. This number may seem staggeringly low — and it is. The average retirement savings among Americans age 32 to 61 is just under $96,000. However, averages are pulled up by super-savers, so this number seems artificially high.

With the prevalence of high deductible health plans (HDHPs), a lot of people are now enrolled in health savings accounts (HSAs). While people are mostly familiar with the short-term savings opportunities these accounts provide for healthcare expense reimbursement, many are also realizing that HSAs are a viable retirement savings option as well.

This begs the question — if people had to choose between investing in their 401(k) or maxing out their HSA for the year, which one is a better retirement savings option?

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Topics: Employee Benefits, HSAs, Retirement Planning

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How Employee Benefits Work When An Employee Qualifies For Medicare

Jeff Griffin

Around 10,000 baby boomers turn 65 every single day, which means 10,000 more people become eligible for Medicare. If your human resources department hasn’t yet been inundated with questions from your older employees about Medicare eligibility, they will at some point — and soon.

After all, many boomers are choosing to work a bit longer than the standard retirement age of 65 for a variety of reasons — some are still physically able to work, so they’re taking advantage of it, others are trying to save more for retirement (because so many people haven’t saved nearly enough, if anything), and others just aren’t ready to give up their day jobs yet.

It’s possible that some of your employees have deferred Medicare eligibility because they haven’t actually retired yet, but some people who are still employed find it’s cheaper to take the leap into Medicare (and all its parts) than to stay on their employer-sponsored health plan (though many choose to enroll in both). That said, it’s not quite that cut and dry when it comes to those enrolled in health savings accounts (HSAs) through high deductible health plans (HDHPs).

Here are the things that need to be considered when an employee or covered spouse turns 65:

Medicare Part A

With the exception of those employees actively contributing to an HSA, there’s really no reason for them not to enroll in Part A, which covers hospitalization, home health care, care at nursing homes, and hospice care. As long as employees have worked and paid Medicare taxes during a minimum 10-year period of time (the period of time deemed long enough by the government), Medicare Part A comes premium-free (however, it does come with coinsurance). The situation gets a bit more complicated when employees who are ready to enroll in Medicare are also contributing to an HSA.

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Topics: Employee Benefits, Retirement Planning, HSA regulations, HSAs, Medicare

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What is a Limited Purpose FSA? (And Should You Offer One?)

Jeff Griffin

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).  

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Topics: HSAs, Consumer Driven Healthcare, High Deductible Health Plans, Savings Plans

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HRA vs. HSA: Which is Better?

Jeff Griffin

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.

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Topics: CFO, HRAs, HSAs, Consumer Driven Healthcare, Cost Containment, High Deductible Health Plans

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4 Common Mistakes to Avoid with HSA Regulations

Jeff Griffin

Health savings accounts (HSAs) have grown in popularity in recent years for a variety of reasons. Many employers are looking to cut employee benefit costs due to the rapid and seemingly never ending increasing cost of healthcare, while others are looking to avoid the ACA’s hefty Cadillac Tax (an ACA-related 40% tax, set to go into effect in 2020 which impacts “rich” health coverage that exceeds predetermined threshold amounts).

High deductible health plans (HDHPs) allow both employers and employees to save on premiums and are a simple way to accomplish both goals. They also fit with a growing trend towards consumer-driven healthcare. Most importantly, as HDHPs become more prevalent, so do HSAs as they go hand-in-hand.

Enrollment in HSAs has exploded in the past decade, growing from 3.2 million people in 2006 to 20.2 million in 2016 and once the data is in for 2017, this number is expected to be even higher. Even with all their pros and cons, it appears that HDHPs with HSAs are here to stay as more and more companies make the transition to less expensive health insurance options.

HSAs may be a good deal for businesses and workers alike, but it’s important for employers to be informed of HSA regulations so they can ensure the HSA they offer is compliant with federal law. Here are four common mistakes employers make when offering an HSA.

4 Common HSA Mistakes to Avoid

Mistake #1: Setting Up An HSA with a Non-Qualified High Deductible Health Plan

Employers are only allowed to offer an HSA when it’s set up in conjunction with a qualified high deductible health plan. Note that this doesn’t simply mean a health insurance plan with a high deductible — many comprehensive plans are now being built to have higher deductibles so they can boast lower premiums, which is another common money saving strategy among employers these days. Rather, the term “High Deductible Health Plan” is specific to health insurance plans that not only have high deductibles, but also conform to other established federal guidelines.

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Topics: Employee Benefits, HSAs, HSA regulations

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How to Motivate Employees to Participate in HSAs

Jeff Griffin

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:

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Topics: Employee Benefits, HSAs, Behavioral Psychology, Consumer Driven Healthcare, Employee Engagement, Plan Design

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How To Engage Employees in Consumer Driven Healthcare

David Rook

For any employer hoping to contain employee benefit costs, workforce adoption of high deductible health plans (HDHPs) is almost always a critical component these days. Yet this flight to what’s become known as “consumer driven healthcare” comes with a duty to help the workforce become savvy shoppers of healthcare. As the traditional decision makers in this area, employers must keep in mind that many employees will feel overwhelmed with this new responsibility.  If fact, many experts already feel as if we are failing as a nation when it comes to this concept of healthcare consumerism.

Never before have employees had to care much about whether a prescription was brand name or generic; they just had a copay. Maybe that copay was more expensive for the brand name drug, but it was manageable in comparison with paying the full retail price. They also never had to pay more than a copay for a doctor visit, but now they’re on the hook for the whole bill (at least until they reach their deductible). It’s understandable that many people feel confused and frustrated by this change in benefits.

This is not, however, an impossible transition. With more and more companies shifting to HDHPs every year, the education challenge is widespread. Engaging employees in the decision making process will empower them to feel as if they can make good decisions on their own — instead of expecting their employer to do it for them. With some education and a little assistance from your employee benefits broker and internal communications team, employees can gain the confidence they need to control their healthcare spending. Here are a few things employers can do to engage their employees in consumer driven healthcare.

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Topics: Employee Benefits, HSAs, Cost Containment

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