How HSAs Help Both Your Business and Your Employees
If you don’t already know, Health Savings Accounts have become the go-to solution for containing medical costs. This is especially true in companies that have maxed out what they can pay toward providing employees with traditional health insurance.
According to PricewaterhouseCoopers’ Health Research Institute, the upward medical cost trend has been hovering between 6 and 7% for several years, and it is expected to grow again by 6.5% in 2018. The same study reports that increased cost-sharing with consumers is taking hold and will continue to restructure how employers address their workers’ healthcare needs. (1)
Meanwhile, the 2016 Willis Towers Watson Best Practices in Health Care Employer Survey showed that many companies are easing the pain of swelling health care costs by encouraging enrollment in high-deductible health plans paired with HSAs. Among companies already offering this type of benefit, nearly half (49%) plan to make it the only coverage option for workers by 2018. (2)
How does an HSA benefit help your company’s financial wellness? Let’s look at the business advantage.
How HSAs Help Your Company’s Bottom Line
First think of the high-deductible health component of this arrangement. With employees picking up a larger share of their own medical costs than they would under a traditional plan, it’s going to spell savings for your company. At the same time, HSAs are helping workers reconnect with the real costs of their doctor’s visits and health care services. When employees know they’ll need to cover a significant portion of their medical bills, they’ll be more aware of their health needs. In turn, that will encourage them to be proactive in pursuing a healthy lifestyle. And a healthier workforce translates to a wealthier company.
And in case you’re thinking ahead about the Affordable Care Act’s high-cost plan tax (HCPT) which takes effect in 2018, HSAs help you there as well. According to the Henry J. Kaiser Family Foundation, employers can reduce costs under the tax [by] increasing deductibles and other cost sharing. (3)
But it’s not just employers who benefit from HSAs.
How HSAs Help Your Employees Win Financially
At first glance, most people will notice this plan’s high deductible. And as discussed above, it might mean employees will pay more of their medical costs than they’re used to.
But these plans also mean lower premiums for your employees and their families. What’s more, they’ll only be paying for as much medical care as they need. HSAs are a particularly good fit for younger workers and their families who don’t suffer chronic medical issues but who wish to use more of their income to reduce debt.
And even in years with more medical expenses than usual, workers in an HSA/HDHP are well covered. Many HSA plans pay 100% of remaining medical bills once the deductible is met, and they’re tax-advantaged savings accounts. That means employees pay no taxes for sending premiums to an HSA, nor are they taxed later so long as they use the money to cover approved medical expenses. The money in an HSA can even be invested in a mutual fund, will roll over from year to year, and continues to grow like a medical 401(k) that shores employees up against future medical needs.
Smart Incentives to HSA Participation
If you’re looking for ways to drive participation in an HSA benefit in your own business, consider these approaches:
- Offer a company match for enrolling. Be sure to emphasize how the match you offer can double their HSA investments right off the bat.
- Many employers use participation in health and wellness programs as an incentive to get into the HSA. Some offer a match for employees who go for yearly wellness exams.
- Others tie the HSA match to fulfillment of step challenges with wearable devices or use of gym memberships.
Overall, HSAs enhance financial wellness both for workers and for the employers who offer them. If you’re looking for a smart way to cut health care costs, keep your employees covered, and encourage positive, holistic behavior change, this is a benefit that would fit your company well.