HSA Considerations for Employers

Over 21 million policyholders and their dependents have a health savings account (HSA). Since 2013, HSA enrollment jumped an astounding 53%. The interest in HSAs continues to grow.

Do you offer an HSA?

Perhaps you are thinking about offering one but there are so many choices. How do you choose the best option for your company? Healthcare is not simple, and we don’t pretend it is. But we do believe there is a simpler way to help stretch your employees’ and your healthcare dollars.

Why do Employers offer an HSA?

Employer sponsors of health benefits had tough decisions to make. Rising healthcare costs forced many to increase the employee’s portion of healthcare benefits. But, shifting costs can cause chaos for your employees.

  • How do you balance the cost savings your company needs with solid employee health coverage?
  • Where do you find cost-effective assistance to help employees manage healthcare expenses?
  • What can you do to help your employees become better healthcare consumers?

Offering an HSA is a powerful first step.

But I already offer “great” health insurance…

We hear this often. Employers say “we would never offer a High Deductible Health Plan to our employees because it is perceived to be ‘bad’ insurance.” So much of whether a plan is “good” or “bad” has to do with the plan design and the individual situation that an employee goes through in any one particular year. It is virtually impossible to solve for this.

However, employers should consider the demographics of their employee base. A plan that is low deductible comes at a cost: a higher monthly premium. That premium goes straight to the insurance company. If you have employees who are not actively seeking medical or health-related services where insurance would be beneficial to them, then it really doesn’t help them if the plan is super low deductible. As a matter of fact, it hurts them since they are paying either all or some portion of a higher premium for coverage that is not or under-utilized.

…and I pay 100% for my employees’ health premiums

Very few companies are in the fortunate position to be able to do this, but if you are one of them, congrats! It’s fantastic to offer your employees this level of coverage. But similar to the previous paragraph, paying health premiums may not be the best option for all of your employees. If your employees are not going to the doctor for things other than preventative services, then there is a massive benefit that your employees don’t have access to: the HSA.

Think about this for a moment. If you have the opportunity to offer multiple health plans (a traditional low deductible health plan and a HSA qualifying high deductible health plan (HDHP)), your employees can self-select which option is better for them. We have seen many employers decide to fund a portion (or all) of their employees’ HSA accounts if the HDHP plan is selected. Why? Because as mentioned in previous posts, the benefits of the HSA stay with the employee. The money rolls over from year to year and carries a triple tax-advantage. Your employees can begin creating a nest egg for future healthcare expenses. Additionally, for the employer, when employees choose a higher deductible plan, it saves them money since the premiums are lower! It’s a win-win.

So what does this mean?

Talk to your broker or benefits consultant. They should be acting as your trusted advisor to help you make the best decisions for your organization. You can also visit us at https://livelyme.com. If you don’t find what you are looking for, drop us a note and say hello! hello@livelyme.com.

Source: Employee Benefit Research Institute, Issue Brief #427, November 2016 and United Benefits Advisor Health Plan Survey Special Report, 2016.