By Alex Tolbert, Team Member, Bernard Health LLC
Are you considering offering a health savings account-based health plan to your employees? Do you already offer one, but don’t have the participation you’re looking for?
At Bernard Health, we have built an industry-leading track record by helping our clients achieve an average, first-year employee health savings account (HAS) participation rate of 81 percent. Here are five tips from what we’ve learned along the way!
1. HSAs’ purpose is to equalize the tax treatment of insurance and cash
It is easy to get dragged “in the weeds” quickly when researching HSAs. From a high level, keep in mind their purpose is simply to equalize the tax treatment between health insurance and cash. Before HSAs, you could give your employees health insurance and write it off as a business expense, and your employees paid no taxes on the benefit.
Now, with HSAs, you and your employees can do the same thing with cash. This takes away the perverse tax incentive that favored insurance over cash.
2. HSAs are different than HSA-based health insurance
The HSA-based health insurance is what you pay premiums for to the health insurance company. Having that type of health insurance is what allows you to have an HSA. Get your messaging right around this point, or your employees will be lost.
3. Don’t call your other health plan the “PPO plan.”
We see this all the time and it’s a big mistake. The term “PPO” refers to the network of providers available with a certain health plan. Historically, the opposite of “PPO” was “HMO.”
If you call your non-HSA plan the “PPO plan” and then your other plan your “HDHP” or “high-deductible health plan,” many of your employees or their spouses will say, “Oh, well I definitely want the PPO network” and they’ll go no further in their analysis in taking your “PPO plan.”
In doing so, they are assuming because of the way you’ve named the plans, the HSA plan is not on a PPO network. Of course, that is generally not true. Generally, both plans are on the exact same PPO network. Naming one of them the “PPO plan” is therefore pretty misleading.
Instead, we suggest calling your non-HSA plan the “traditional plan” or the “copay plan.” If you have one plan called the “HSA plan” and the other called the “copay plan,” then you are doing a better job of naming your plans in a non-pejorative, meaningful way. This also has a huge impact on enrollment success.
4. Choose one bank to be the custodian for all of your employees’ HSAs
Don’t just tell employees they are “on their own” when it comes to getting their HSA opened. Work with a bank that will make it easy for all your employees to get their HSAs opened at the same time, and with minimal effort.
A bank like this may charge a monthly fee of some sort for the HSA (something in the $2 - $3 range is typical), but that incremental cost can really be worth it versus a bank that has “free” HSAs but a disjointed on-boarding process. Besides, if you are contributing to your employees’ HSAs, then your messaging to employees on this point can simply be that the $2.50 monthly fee is coming out of what you are contributing on their behalf.
What makes an on-boarding process “disjointed”? Ask the bank if they require a copy of each employee’s driver’s license in order to get the HSA opened for each employee. If the answer is yes, be careful. Not all banks require this, and you want to work with one of the banks that doesn’t.
Remember: you offer health benefits in part to have happy employees. If you have a disjointed process for getting the HSAs opened and funded, employees aren’t going to be happy. Besides, you can always offer a second, “free” HSA in a future year once everyone has a strong understanding of the program.
5. Don’t charge less for the HSA-based health plan option
Many employers “share” the HSA savings by charging employees less for the HSA plan. This is the wrong approach.
Instead, you should charge employees the exact same for both your traditional health plan and your HSA plan. Then, share the HSA premium savings with employees by contributing to their HSA. This one tweak to your plan structure will have a tremendous impact on your enrollment success.
About the Company:
Founded in 2006, Bernard was inspired by the need for a “most trusted advisor” in the face of increasing health insurance complexity. We work to achieve our mission to be the world’s most trusted advisor in this area through a unique mix of technology and personal touch. Find us online at www.bernardhealth.com or www.bernieportal.com.
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