On June 24, 2019, President Trump signed an Executive Order to improve price and quality transparency in American Healthcare. The order calls for upfront disclosure by hospitals of actual prices for common tests and procedures to keep costs down.
While most of this order relates to price transparency for hospitals and health systems, it does include a provision that calls for guidance to expand the use of health savings accounts (HSAs) in combination with HSA-qualified health plans:
Sec. 6. Empowering Patients by Enhancing Control Over Their Healthcare Resources.
(a) Within 120 days of the date of this order, the Secretary of the Treasury, to the extent consistent with law, shall issue guidance to expand the ability of patients to select high-deductible health plans that can be used alongside a health savings account, and that cover low-cost preventive care, before the deductible, for medical care that helps maintain health status for individuals with chronic conditions.
(b) Within 180 days of the date of this order, the Secretary of the Treasury, to the extent consistent with law, shall propose regulations to treat expenses related to certain types of arrangements, potentially including direct primary care arrangements and healthcare sharing ministries, as eligible medical expenses under section 213(d) of title 26, United States Code.
(c) Within 180 days of the date of this order, the Secretary of the Treasury, to the extent consistent with law, shall issue guidance to increase the amount of funds that can carry over without penalty at the end of the year for flexible spending arrangements.
* It is important for Alegeus clients to note that we expect these FSA carryover changes to happen, at the latest, just before the Christmas holiday. When the new carryover amount is announced, Alegeus clients can immediately update this amount within their Alegeus platform.
While steps in price transparency are positive, in order to drive better outcomes for all, it is imperative that we get more Americans into health plans that make them more accountable for their costs. For consumer-driven healthcare (CDH) to work, Americans must be financially accountable for their healthcare and empowered to make better decisions. We look forward to seeing the guidance from the Secretary of the Treasury this summer.
What can you do to get more Americans in consumer-directed health plans and accounts this open enrollment season?
Hands down, the best thing you can do, is to start having strategic conversations today with brokers and employer groups about plan designs for 2020. Here are the five best practice tips and tricks we recently shared with BenefitsPro.
1. Pair a tax-advantaged benefit account with every health plan, not just high deductible plans and HSAs
In an ideal world, every out-of-pocket healthcare cost would flow through a tax-advantaged benefit account and save the average consumer 30 percent off of their qualified out-of-pocket expenses. But, it’s not just high-deductible plan participants that are subject to out-of-pocket costs because most plans have some measure of out-of-pocket financial responsibility. Consider this: 85 percent of consumers in employer-sponsored health insurance are enrolled in a plan (of any type) that is subject to a deductible, yet only 40 percent of those consumers are enrolled in tax-advantaged accounts.
Most employers today still offer multiple health insurance plan designs. Whether they offer a traditional PPO plan (paired with an FSA), a high-deductible offering (paired with an HSA), or any other combination, encourage your employers to think about positioning the plan and the account together as one value proposition that helps employees get the best value for every dollar they spend on qualified out-of-pocket costs.
2. Design HSA-qualified health plans that create value, not just shift costs
Controlling healthcare costs is one of the primary drivers for employers to adopt high deductible plan options. However, if there is no value in it for the consumer, adoption and benefit satisfaction will suffer. In order to best position HDHP for success, you must encourage your employer to consider the relative costs and value of the HDHP versus all other options offered.
The selection of the HDHP must represent a clear “win” for the employee. Ideally, the HDHP benefit design should offer an equivalent or better actuarial value that considers the average cost of employee expenses that will be covered by the plan, as well as the employer’s contribution to the account to help offset out-of-pocket costs.
3. Encourage employer account contributions
Contributing to the account is the most impactful strategy your employer can use to drive participation in HDHPs.
Not surprisingly, when employers contribute dollars to their employees’ healthcare benefit accounts, enrollment dramatically increases. This is why the majority of employers that offer HDHPs also contribute some amount to the HSA. According to a recent study by the National Business Group, 63% of companies that offer HDHP/HSAs are contributing financially to their employees’ HSAs, with a median contribution of $600.
4. Require active enrollment and disrupt the status quo
When faced with difficult or confusing decisions, people tend to stick with what they know; they like familiarity and resist change. If an employee can passively default into their prior year benefit elections, they will most often stick with status quo.
For each open enrollment season, employees should be required to actively make new benefit elections. If the goal is to drive participation in new plan options, such as a HDHP, we want employees to think about their options in comparison to popular legacy plans. Forcing them to actively compare and evaluate plan options, particularly if those decisions are supported with robust education and decision support resources, will give a much greater chance of helping the employee understand the value.
5. Educate employers so they can educate their employees
Effective communication is a key driver of open enrollment success. Because employers are essential to guiding their employees’ benefit decision making, it is imperative that you provide supporting educational materials and resources for your employers too, not just for employees. By training the trainers, you prepare front line people to be a better resource for their employees during open enrollment and throughout the plan year.
To make the 2020 open enrollment experience even more successful, Alegeus clients can participate in the company’s direct-to-consumer email campaign that educates the consumer on the value of CDH accounts ahead of open enrollment deadlines. 2019 participants enjoyed a 55% increase in HSA adoption and an 85% increase in account funding.
Contact your Alegeus Account Executive to get started.