A Savvy Buyer’s Guide to HSAs

Four years after they first became available, the evidence is clear that Health Savings Accounts (HSAs) are helping employ­ers across the country keep the lid on healthcare costs.

According to a 2008 Survey by Watson Wyatt and the National Business Group on Health, increases in health costs for companies with high enrollment in consumer-directed health plans (CDHPs) are roughly half those facing companies offering only traditional health coverage.

Lessons from the First Four Years of the Health Savings Account

Four years after they first became available, the evidence is clear that Health Savings Accounts (HSAs) are helping employ­ers across the country keep the lid on healthcare costs. According to a 2008 Survey by Watson Wyatt and the National Business Group on Health, increases in health costs for companies with high enrollment in consumer-directed health plans (CDHPs) are roughly half those facing companies offering only traditional health coverage.

Yet not all employer groups have had equal success. Full enrollment is still relatively rare; only 6% of the 454 larger companies that participated in the Watson Wyatt survey have 100% enrollment. Adoption rates vary widely depending on plan design and implementation – and employers who fail to enroll a significant number of employees at the start often believe that HSAs are more trouble than they’re worth.

What differentiates the companies who’ve had success in enrolling employ­ees in HSAs and reducing their health­care costs? Here are a few pointers:

Encourage Enrollment
The plans that successfully draw signif­icant numbers of enrollees usually offer significant incentives to employees for changing their buying behavior.

“Consumer-driven healthcare involves giving [employees] the right incentives,” Andrew Webber, president and CEO of the National Business Coalition on Health, said at the 12th Annual NBCH conference in Phoenix. “In some instances, it’s lowering out-of-pocket expenditures. We need to encourage them to select better services and providers.” 2

Sperian Protection, a mid-size man­ufacturer of personal protective equip­ment with more than 1,500 employees, introduced an HSA option in 2006. “Having a relatively high voluntary enrollment rate in the first year is key,” notes J. Michael Vittoria, Sperian’s Director of Human Resources. “Without at least 15% to 20% enroll­ment, it’s perceived as a ‘fringe’ rather than a core benefit.” In the first year, 23% of Sperian employees adopted the HSA option, and in year two, enroll­ment increased by almost a third.

Communicate Early and Often
“Early communication and education for all employees and participants is absolutely critical to the roll out of consumer-directed healthcare,” notes José Becquer, Executive Vice President and head of Wells Fargo Health Benefit Services. “Employees won’t enroll unless they understand the opportuni­ties an HSA gives them to save and invest for the future while paying lower premiums today.”

To that end, Wells Fargo provides employers with educational and mar­keting materials that allow employees to compare the cost savings of various HSA scenarios and educate them about everything from contribution limits, eligible expenses and tax reporting, to investment and savings options.

Choose Your Administrator Wisely
Employers who shop for the least expensive HSA administrator often get just what they bargained for – which is significantly less than they need. On the other hand, HSA administrators charging the highest fees don’t neces­sarily deliver the highest value.

“We often find that employers who’ve had experience with other HSA administrators are our most apprecia­tive customers,” notes Wells Fargo’s José Becquer. “The Wells Fargo HSA offers one of the most competitive fee structures in the industry, but that’s not our most significant advantage.

“Unlike other providers, Wells Fargo Health Benefit Services delivers a com­plete health savings solution,” notes Becquer. “As a diversified financial ser­vices company, Wells Fargo speeds access to healthcare funds and information because we hold not only the account, but also the assets, the investment options, and the processing together under one roof.”

Julie Bunde, Director of Product Management for HealthPartners, where HSAs currently account for roughly 8 to 10% of all plan enrollment, believes that a partnership between the insurer and HSA administrator can provide a more seamless experience for partici­pants and employers. HealthPartners and Wells Fargo Health Benefit Services have a joint marketing agreement and have frequently partnered to implement high-deductible plans for their clients.

“They aren’t required to go with Wells Fargo, they can pick any admin­istrator that they want,” explains Bunde. “But in situations where the whole concept of an HSA is new, I think it helps to involve a trusted, rec­ognized name like Wells Fargo.”

Keep Your Options Open
Lynn Duncan is Director of Compensation and Benefits for Layne Christensen, a drilling and construc­tion firm with offices nationwide, which implemented an HSA option in January of this year. Its HSA option immediately attracted 35% of its 3,000 domestic employees. “We were very confident it would be an attractive choice because we seeded it heavily and our match is 100%,” says Duncan.

The company had not been plan­ning to offer an HSA in 2008, but they suddenly acquired a company that had been offering a high-deductible plan and HSA through a different health insur­ance provider. The company decided to offer all employees the option of either a high-deductible/low-premium HSA plan or a higher-premium PPO plan through the company’s primary insurer. The company also decided to look for a new HSA administrator because they were terminating their relationship with the acquired company’s HSA provider.

“Weigh the advantages and draw­backs of choosing to have your HSA with a provider affiliated with your health insurer,” cautions Diana Monde Dill in her tips on choosing an HSA provider at ehow.com. “An indepen­dent HSA provider typically provides a wider range of investment options and higher interest rates. If you change insurance providers, its affiliate HSA provider will often raise your fees or lower your interest.” 3

“We did a lot of due diligence before selecting Wells Fargo,” says Duncan. “When you’re making this kind of a change, having a brand like Wells Fargo and the communication tools they pro­vided meant a lot to us.”

Let Technology Do The Heavy Lifting
While any insurance company, bank or other financial institution can admin­ister HSAs, they don’t all invest in the technological infrastructure that makes managing or using the accounts seam­less and easy.

Employer tools: Whether you choose to fund your employees’ HSA accounts in part or in full, how do you submit those funds? Do you write a check or make electronic transfers? How do you confirm that those funds have arrived? Multiply the time it takes to solve each issue by the number of employees enrolled in your HSA and you begin to understand why you want an HSA administrator who provides easy-to-use online account management tools.

Participant support: If your HSA administrator can’t answer all your employees’ questions, who do you think they’ll call? Almost any HSA admin­istrator will offer debit cards, but they don’t all offer the customer service sup­port and online tools that make it easy for accountholders to get the informa­tion and access to their funds they need.

“When we looked at the Wells Fargo program, we saw all the components we needed,” says Sperian’s J. Michael Vittoria. “They offered the debit card, easy enrollment process, online services and investment tools we wanted for our employees plus seamless integra­tion with our payroll and employer systems. The ability to make electronic transfers was a serious consideration.”

Look For The Best Deal
In the end, while fees aren’t the best way to judge an HSA, they’re not irrel­evant either, particularly when it comes to participant satisfaction. It doesn’t take many “surprise” fees or surcharges to disillusion employees about the value of their health savings accounts.

“We looked at a number of adminis­trators before deciding on Wells Fargo,” says Layne Christensen’s Lynn Duncan. “We were looking for someone who was knowledgeable about HSAs, someone who would be responsive to us and our employees and someone with a reason­able fee structure. Wells Fargo is all that and more.”

Wells Fargo can help your organization cut rising healthcare costs while enhanc­ing your employee benefits packages. For more information, call Wells Fargo Health Benefit Services at 866-449-9929 or visit https://www.wellsfargo.com/com/employee_benefits/hbs.

©2008 Health Benefit Services, a divi­sion of Wells Fargo Bank, N.A. All rights reserved. Member FDIC.

Sources:
1. Watson Wyatt Press Release: More Companies, Workers Adopt
2. Employee Benefit News “Value-based health embraces consumerism; ditches high-deductible” By Chris Silva November 13, 2007 http://ebn.benefitnews.com/asset/article/368885/index.html
3. eHow “How to Choose a Health Savings Account (HSA) Provider” By Diana Monde Dill No date listed http://www.ehow.com/how_2218573_health-savings-account-hsa-provider.html