Making HSAs and wellness work together
Maximizing the positive impact of a wellness program is a goal of many employers. Much of the discussion around wellness focuses on how to increase employee participation. Doing so remains a challenge for many employers, but there are some innovative approaches employers are exploring.
One concept were seeing is tying wellness to health savings accounts. With a HSA, employees can use tax-free dollars to pay for qualified out-of-pocket healthcare expenses, typically including items such as eyeglasses or prescription medications. Now, some employers are expanding use of HSAs to drive wellness participation.
Combining wellness and HSAs is a long-term strategy. However, there can be some immediate benefit for the employer, which typically begins by going from a traditional fully insured plan to a high-deductible plan with a HSA, thereby saving the employer some money right out of the gate.
Heres how tying a HSA to wellness can work: The employer funds or partially funds a HSA, which is the carrot to get employees interested in the account. Over time, some employers introduce the so-called stick to maximize participation by requiring employees to meet certain health-related criteria.
Heres one possible approach:
In the first year, the employer contributes to the employees HSA account (typically, a 50% contribution).
To receive the 50% contribution in year two, employees are required to complete a health risk assessment.
In year three, the employer will increase the requirements, perhaps including completion of another HRA, plus biometric testing.
By increasing the conditions that must be met, it creates a natural progression that helps employees become more aware of their health and to do something about any issues identified by the screening. It also demonstrates to employees what they need to do to control their personal health care costs; those who make progress get discounts on their plan, so they become more responsible for their own health and ultimately their own savings. As employees control their costs, they help control the employers costs as well.
In the end, its a win-win scenario; the combination of HSAs and wellness programs can provide value to both employees and employers. Its also an effective way to guide beneficial behavior since employees who follow the program are more likely to take steps to become (or stay) healthy. Using this type of program can also be a good opportunity to tie in other health initiatives, such as smoking cessation. One approach is to apply a smokers surcharge on the employee contributions (the stick) while also offering smoking cessation programs to help the employee quit smoking (the carrot to avoid the stick).
To make this combined strategy work, education is a vital. HSAs are most effective if employees understand how the program works, so its the employers duty to teach them. With this approach, employees have greater risk and higher deductibles, but they also have greater control and choice, coupled with an incentive to be healthy. Essentially, this spurs the employee to become a more educated consumer of health care services.
But its up to the employer to make the first move.
Rose Rosa is director of account management for Corporate Synergies, a national group employee benefits insurance broker.