Moving Beyond HSAs to Help Your Employees Take Control of Their Healthcare Spend

Enacted in 2003, health savings accounts (HSAs) were designed to be a simple and convenient way for Americans to set aside pre-tax funds for qualified healthcare expenses; however, as we enter the twenty-first year of HSAs being established, it’s worth taking a closer look at how they’re serving employees, and what else employers can do to help employees better manage healthcare spending.

It’s true that a minority of savvy investors grow nest eggs in their HSAs for the future; however, the more common reality, according to Devenir, is that 50% of HSAs have less than $500 in them, and nearly 20% of those accounts have no funds at all. In addition, findings from KFF Health News show that 50% of American adults don’t have the cash to cover an unexpected $500 healthcare bill. When paired with a recent LendingClub and PYMNTS study that 61% of Americans are living paycheck to paycheck- a grim picture of an average worker’s ability to afford healthcare begins to emerge.

For millions of Americans, HSAs are not providing significant relief from their healthcare costs, most likely because they don’t have the disposable money to contribute. Yet, the conversation around HSAs often centers around education, ensuring employees understand the differences between HSAs and FSAs and how they can maximize their HSAs by saving or investing.

While there is certainly room for improvement with employee education efforts, these numbers suggest a strong, underlying issue of access to funds to contribute to these accounts. HSAs remain valuable tools for those with the ability to contribute and save, but what else can employers do to help ensure their employees can access and afford the health care they need?

Here are a few suggestions:

• Review plan design. There are multiple ways to provide financial assistance to employees through your plan design. One solution is to provide a low-deductible or zero-deductible option, and another is to offer a lower-premium plan and pass the savings back to employees through a bonus or employer HSA contribution. Employers can structure their contributions to be based on salary, recognizing that lower-paid employees might need additional support. An effective plan design can provide opportunities to better assist employees who may be struggling financially.
• Provide new sources of funds. Healthcare expenses are typically not discretionary. If employees don’t have funds available in their HSAs or other savings, they could be paying in ways that aren’t financially optimal, including utilizing a high-interest credit card or pulling from a retirement plan. Employers can help here by providing ways for employees to pay for care over time using a healthcare-specific lending benefit. These solutions can help employees get the care they need, when they need it, and minimize the more serious and costly issues that can occur when health care is delayed or foregone.
• Get creative with bypassing HSA contribution limitations. Unlike FSAs, where the full annual contribution is available at the beginning of the plan year, HSA funds are typically not available until they’re contributed. Some employees may need a way to split healthcare expenses into more manageable pieces over time that can be repaid as pre-tax HSA funds are contributed. Look for healthcare lending solutions that can link to employees’ HSAs, enabling them to maximize their tax savings without needing the full cost of their care in their accounts up front.

Helping employees access and afford needed health care should be at the top of employers’ minds. Given 56% of American adults said whether they like their health coverage is a key factor in deciding to stay at their current job, according to an AHIP survey, prioritizing this issue can be a difference-maker in boosting employee satisfaction, retention and engagement. By providing a comprehensive solution that addresses employees’ specific needs, employers can help their employees create happier, healthier futures.

As your organization thinks about how to better assist employees as they seek the healthcare they need, reach out to your AssuredPartners team for more information on Lane Health and other unique solutions to manage healthcare spending.