Early Adopters Of HSAs Report On Lessons Learned
The Health Savings Account (HSA), a tax-advantaged medical expenses account that has been available since January 2004, is becoming increasingly popular with employers looking for ways to reduce their health insurance expenditures. But because the HSA, which must be used in conjunction with a high-deductible health plan (HDHP), differs from traditional group health insurance plans, employers who have added the accounts to their benefits packages have found that employees often need encouragement and education before they are willing to consider the HSA option, according to a report by Fidelity Investments.
Based on discussions with client firms that have begun offering HSAs to their employees, Fidelity reported there were three keys to a successful HSA rollout learned by early adopters.
First, early adopter companies with the strongest HSA enrollment rates went beyond simply offering the HSA as an additional option; they also made changes to their health care plan design to promote HSA enrollment. These employers typically asked employees to select a plan from a number of choices during the annual enrollment period, and used an HSA coupled with a high-deductible health plan as the default option for employees who did not choose. As a result, the report said, these companies were able to move as many as half of their employees to an HSA plan.
Second, employers who communicated health plan changes well in advance, and at each stage of implementation, had the highest rates of HSA enrollment, according to the report. Providing information repeatedly, and in different forms, proved to be the most effective communication strategy for early adopters. Frequent communication gave employees ample time to consider the message and decide on signing up for an HSA.
Finally, educational tools and materials were beneficial in helping employees make their health plan choices, the report said. Cost calculators and background information on consumer-driven health plans make it easier for employees to understand the pros and cons of the HSA model, compared with other health plans.
In addition to these key lessons, Fidelity said early adopters also found it useful to develop a strategy to determine how HSAs might satisfy their company’s long-term plans, and to work closely with their health plan provider to understand the administrative details of HSA implementation. HSA enrollment rates tended to rise when companies contributed to employees’ accounts, and when employers modeled different HSA plan designs to find the one that best meets the needs of their employees.
"Companies who saw the most success in adopting HSAs were those who designed their benefits programs to change employee behavior—the first critical step in reducing costs," said Marc Hallee, senior vice president of health and welfare consulting for Fidelity Human Resources Services Company.
"Rolling out an HSA is a good way for employers to introduce employees to the broader concept of personal accountability for health benefits decisions," Hallee added "It empowers employees to better control health care expenses now, while also encouraging them to save for long-term health costs in retirement. This behavioral shift is critical when you consider that most workers are still largely unaware that an average couple retiring at age 65 today needs $190,000 to pay for health care costs."
