The passage and implementation of the Affordable Care Act (ACA) have brought with it many sweeping changes to the healthcare industry and have caused many employers to take a fresh look at the way they offer healthcare benefits. Insurance market reforms – such as the establishment of public exchanges, expanded coverage mandates, and quality and value incentives – continue to drive employers and consumers toward adoption of high deductible health plans (HDHP) and complementary health savings accounts (HSAs).
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.
Did you know the Alegeus platform was designed to manage the unique requirements of Voluntary Employee Benefit Associations, or what is more commonly known in the market as VEBA? Alegeus clients can easily offer and administer VEBA programs leveraging their existing platform, operational infrastructure and customer engagement channels.
HSAs and FSAs seem to get all of the attention, and growth in HSAs continues to outpace HRAs, but the fact remains that HRAs have grown steadily along with HSAs and are predicted to continue to grow at a rate of 10-15% annually. This modest growth projection underscores the potential opportunity many plan administrators are leaving on the table by not fully helping employers understand reasons to consider HRAs in addition to HSAs.
Prior to 1978, most employee benefit packages included pension plans, whereby employers agreed to assume a significant percent of employees' retirement costs, based on their working salary – assuring that employees would receive a defined amount of money per month in retirement (a defined benefit). However, over time, this became a liability for employers, a problem that largely contributed to the economic crisis in the late 1970s.
The unsustainable growth of US healthcare costs has been well documented. In an environment where insurance premiums have outpaced wage growth and inflation every year since 1998, employers must consider how they will control healthcare costs – or if they will continue offering coverage at all. These cost drivers are prompting employers to consider alternatives to traditional employee health benefit models.
Consumer-driven healthcare is becoming more popular in the United States, which has led to increasing prevalence of health savings accounts. According to the sixth semiannual Health Savings Accounts Survey by Devenir, around 15.5 Americans are covered by HSAs, which is a 15 percent bump from the previous year. HSAs have grown to an estimated $18 billion over 9.1 million separate accounts.
Wellness programs are becoming more popular with the surging consumer-driven healthcare trend. However, just because a business implements one of these programs doesn't mean it will be successful. In fact, many companies are struggling to get employees to participate. According to a recent survey from Bswift, 85 percent of large organizations and 81 percent of small employers have wellness programs in place, and just 44 percent of programs have a participating rate higher than 50 percent.
Most businesses offer employee benefits such as health insurance and paid-time off. But, with many switching to consumer-driven health plans - which puts more of the cost on employees - it might be a good idea to add some unique benefits to keep employees happy, such as:
Employers have many options when it comes to ensuring their workers have health insurance. Some already sponsor health insurance programs, while others are considering adding or modifying coverage. A number of companies might choose to send their workers to public health marketplaces, and small firms also have the option of enrolling in the government's Small Business Health Options Program in order to secure a tax break. However, many health professionals predict that the most popular option employers are likely to choose is extending a defined contribution to workers to purchase their health coverage through a private exchange.