15 Do’s and Don’ts to Accelerate HSA Adoption
Consumer-driven healthcare plans and accounts have been continuously growing and evolving since the introduction of FSAs in the 1970s – from the rollout of the HRA, to the latest incarnation of account-based health plans, the HSA. There are many compelling reasons to ride the wave of migration away from other CDH accounts to leverage and incentivize HSA adoption. We will dive into those reasons, pairing best practice guidance that will help benefits administrators accelerate the path from FSAs and HRAs to HSAs.
CDH accounts are the path to healthcare consumerism
Each generation of healthcare benefit account has come with an increasing level of consumerism required. The traditional employer-provided health insurance plan paired with an FSA was the first step in guiding consumers to project out-of-pocket expenses. Still, consumers didn’t have a voice in plan design unique to their own circumstances, and there was no cost transparency so they had no accountability for the cost of care.
Next came high deductible health plans (HDHPs) paired with HRA accounts. HDHPs are an improved step in giving consumers more control over how and where to spend their healthcare dollars while HRAs are a viable option for helping plan participants fund higher out-of-pocket expenses and allocate premium savings for future expenses. Yet, HRAs have features that limit their attractiveness to consumers, including complexity and the risk of losing employer-contributed funds with attrition.
Why you should laser-focus on HSAs?
HDHPs in conjunction with HSAs support the highest degree of consumerism. In addition to the increased control afforded by the HDHP plan, there is also greater financial responsibility and cost transparency inherent in an HSA. They are the lowest-risk CDH account for consumers, can be transferred from employer to employer and dollars aren’t tied to a particular fiscal year. For these reasons, HSA adoption is outpacing the growth of FSAs and HRAs, and employers are increasingly offering HSAs in conjunctions with HDHPs, with 75% of large employers projected to offer HSAs by 2018 (Mercer’s National Survey of Employer-Sponsored Health Plans).
As consumers are supported and enabled to take greater responsibility for their care, costs across the system will come down and health outcomes will improve. With HSA adoption steadily growing among both employers and consumers, we are well down the path to shifting the spotlight on to HSAs over other account types. Now is the time to migrate consumers along the path to HSA adoption.
If you need more evidence of the tremendous market potential for HSAs, here are other factors that make HSAs an attractive offering:
- HDHPs and HSAs are a win-win for all and should be an easy sell to consumers. As consumers struggle to adapt to the shifting healthcare consumerism environment, they’re most receptive to listening to trusted advisors, including benefits administrators and human resources departments. Arm them with the proper communications strategy and the decision support tools necessary to help consumers understand the best plan for their unique situation, as well as their cost savings and projected financial needs, and adoption will follow.
- HSAs are not only a complement to employment benefits, but a long-term investment vehicle that will help consumers pay increased health care costs during retirement. In fact, as one’s tax rate increases, the tax savings from HSAs can outpace the rate of return from a 401k match.
- HSAs can help unlock the millennial market. With a high amount of student loan debt and low wage growth, millennials are more cost-averse than other demographic groups. They are also less averse to change and transition, meaning that HSA adoption among this group is highly likely with proper positioning.
Employ best practice strategies to migrate consumers
Now that we better understand how HSAs offer improvements over other CDH accounts, let’s go over some of the dos and don’ts for helping employers guide consumers to HSA adoption and funding.
- Simplify plan design and reduce/eliminate other plan options. People will take the path of least resistance. Confusion and a lack of understanding, combined with a fear of the unknown and the ability to keep doing what they’ve always done, is a recipe for HSA adoption failure.
- Bundle HDHP plans with HSAs and provide education and incentives for participation. HDHP plans can be scary for consumers who are used to a more traditional model of employer-based health benefits. Providing education and tools that calculate tax and premium savings can help consumers understand how they can fund their HSA for short and long-term expenses.
- Employers should shift their investment from assistance with insurance premiums to investment in employees’ HSA accounts. Research from Alegeus shows an 89% participation rate among employers who contribute to the HSA versus 35% participation among employers who do not contribute.
- Reinforce wellness programs and preventive care. As consumers adjust to a more retail-like healthcare marketplace, they have more of a vested interest in keeping their healthcare expenses to a minimum. In addition to incentivizing HSA participation through direct contribution, employers should also encourage better health outcomes through ongoing preventive care and wellness program incentives.
- Help with funding recommendations. Another point of friction along the path to HSA adoption among consumers is discomfort with predicting future healthcare expenses. Benefits administrators and employers should provide calculators and other tools that guide consumers through thinking about their current and past circumstances in order to plan for future expenses with some degree of accuracy.
- Design a well-thought-out communications strategy. Your strategy must cover a variety of channels (in-person, print and digital). In addition to open enrollment materials, offer webinars, lunch and learns, on-demand video, displays and dedicated Intranet pages. And, importantly, information should be available and reinforced throughout the year – not just during open enrollment when people are pressured by enrollment deadlines.
- Use a train-the-trainer approach. Consumers are more likely to take the advice of friends and colleagues. By selecting, training and remaining engaged with a select group of internal leaders within an employer group, you can build a network of advocates to act as cheerleaders and trusted resources for employees with questions and concerns.
- Set specific enrollment objectives – if it’s not measurable, it’s not mentionable. Only by creating and tracking program successes and failures will you be able to course-correct along the way.
- Change the conversation about HSAs. Position HSAs as a unique financial investment that not only benefits consumers during employment years, but also offers financial protection and tax savings from increasing healthcare expenses during retirement.
Implementing the above best practices will take your program far, but there are also some things to avoid that could hamper success:
- Offer HSAs and HDHPs alongside other offerings. Keep offerings simple and don’t make it too easy for employees to remain stagnant.
- Offer low or no account contributions. Employer contributions can increase participation by more than 50%.
- Ignore the deductible hurdle. Help alleviate the fear of high initial out-of-pocket expenses by showing annual premium savings, employer-contributions and tax savings.
- Rely on open enrollment materials and other impersonal, mass communications. The more you can demonstrate meaningful tax and costs savings at a personal level and reinforce that message throughout the year, the more successful adoption you can expect.
- Demonstrate ambivalence. Get employees excited about consumer empowerment! Executive leadership and management should show enthusiasm and understand the benefits of HDHP plans and HSAs.
- Leave it up to vendors. Vendors are a fantastic resource for getting benefits administrators and human resources departments up-to-speed and excited about the latest health plan options, but in order for consumers to fully embrace this shift toward consumerism, they must feel they are being advised by people they know and trust. Employer human resources and peer-advocates are essential to gaining consumer acceptance of HSAs.
The migration along the path to increasing healthcare consumerism is already happening. The only question that remains is how you can help accelerate growth and capitalize on the tremendous market opportunity? By implementing the proper strategies and best practices, you can lead the way.