Philip Massey, director, client service and delivery, Willis Towers Watson, told attendees of PLANSPONSOR’s virtual 2021 HSA Review conference that it is beneficial to get employees engaged with their HSAs because underengaged employees miss out on a significant financial opportunity.
Massey shared data that shows only 6% of accountholders invest their HSA assets, so the vast majority are losing potential earning power and the opportunity to use HSAs as a path for saving for health care expenses in retirement.
“Individuals will have a great financial need for health care expenses in retirement,” he told conference attendees. “Our study estimates that a couple retiring today will spend over $300,000 for medical expenses in their lifetime.”
He added that by not participating in an HSA benefit, employees are also missing out on tax advantages. “Contributions can be made tax free, but distributions are also tax-free,” Massey said. “Even 401(k)s don’t offer that.”
Employers that aren’t helping participants maximize their HSAs might also be missing an opportunity to assist employees with their overall financial wellness, Massey said.
HSAs also offer a cost savings for employers, noted Inci Kaya, strategic adviser, Aite-Novarica Group’s Health Insurance, since employee contributions are not subject to any Federal Insurance Contributions Act (FICA) tax. She suggested employers could use their portion of that savings to hire new talent or give employees a bonus.
Michelle Costo, senior product director for MetLife’s health savings and spending account business, said it is not just important for employees to have access to benefits that contribute to financial wellness, but that they need to understand the benefits and how to use them. She said MetLife research has found most employees can’t handle a $3,000 medical expense.
“Putting communications together helps employees’ understanding of benefits and helps employees see you are trying to help. This can increase employee loyalty, satisfaction and trust,” Costo told conference attendees.
Using Plan Design to Boost Participation and Engagement
Plan sponsors can use their benefit plan design to engage employees. First, Costo said, employers should make employees re-enroll in health benefits each year.
“It is important not to default employees into health plans; they need to evaluate their benefit options year over year,” she told attendees. “Many employees might be surprised to learn that an HDHP [high-deductible health plan] is beneficial for them.”
Providing company contributions or seed money into employees’ HSAs can boost engagement as well, Costo noted. “It can relieve an employee’s stress about signing up for an HDHP,” she said. “Also, a company match gives employees more skin in the game for making their own contributions to HSAs. MetLife sees higher employee contributions and savings when an employer match is used.”
Other much less common plan design features that can boost HSA participation and engagement, according to Costo, are automatic enrollment into the HSA and automatic contribution increases. She added that it is important to give employees flexibility to enroll at any time during the year and to remind them that they are able to change their contributions at any time during the year.
Kaya said plan sponsors can tweak the provision of employer contributions to boost participation and engagement. They can make seed money available at the first of the year or they can match employee contributions with each payroll. Plan sponsors can also offer what Kaya calls a “line of credit” to give employees access to their HSA funds before they put them into their accounts. She noted that some employees get might stop contributing once they get employer money into their account.
Using Communications and Tools to Boost Participation and Engagement
Kaya said Aite-Novarica Group asked employers who should educate employees about HSAs, and, for the most part, the answer was “all of above” between human resources (HR) professionals, benefit providers, benefits brokers and other options.
“This tells me that all have a part in educating employees and that education should happen throughout the year so it can be better absorbed by employees,” she said. “And who should educate and when depends on the relationship between a plan sponsor and its partners.”
Plan sponsors need to start with getting employees to participate in HSAs: They need to push to get accounts open, Massey said, but they shouldn’t stop there.
“They need to get employees engaged with their accounts because some might rely only on employer seed money and not contribute, and those individuals could find themselves leaving a lot of the benefits of HSAs on the table,” he explained. “If employees are not contributing at least the amount of the health plan’s deductible into an HSA, they will incur more out of pocket costs than they need to.”
To boost participation in the HDHP and the corresponding HSA, plan sponsors can offer a benefits decisonmaking tool, Kaya said. “Without such a tool, employees could choose a plan by which they are overinsured based on their household needs,” she added.
According to Kaya, an Aite-Novarica survey of employers found they use educational websites (with videos, calculators, etc.), on-site training and printed materials most often for employee benefit education and communication, but when asked what the most effective tool is, on-site training was cited first and educational websites second. Printed materials were selected as the least effective on a list of six modes of communication.
“We see more mobile app use with younger employees, so it’s important to make sure mobile apps are engaging and personalized,” Costo said.
Costo added that plan sponsors should not just point out tax savings to employees, but get them to look at their long-term goals. She noted that this is another way digital tools or calculators can help with participation and engagement. She said calculators can show employees the impact of spending slightly less from their HSAs or contributing slightly more.
“Calculators are evolving so employees can see how the actions they take today impact tomorrow,” Costo noted. “And calculators can now offer tips personalized for employees.”
Massey said he is a big proponent of personalizing education; there’s no one-size-fits-all approach. There might, however, be groups of employees with common circumstances. For example, he said, there should be one message for those not contributing and only relying on employer seed money, another for those contributing and investing, and a different message for those contributing but not investing.
“I’ve seen data that shows people who receive nonpersonalized messages view that as spam,” Massey noted. “So it is key to speak to someone’s particular situation if you are going to help them take the next step and maximize their benefit.”
To segment and personalize the approach to communication, employers can use plan analytics to understand participant behaviors and identify needs for improvement, Costo said. She also suggested putting all communications and tools on one microsite so employees will have a single place to seek information at different times throughout the year or throughout their lives.
Communication strategies could also be personalized based on whether an employee is new to HSAs or not. Costo suggested employers start HSA education many months before open enrollment because employees who are new to HSAs will be overwhelmed with information about all their benefits. For someone who already has an HSA, employers want to continue to increase awareness of how to maximize the benefit, she said.
“Don’t forget the power of multiple touchpoints,” Kaya said. “And don’t just communicate at open enrollment. That’s four to five weeks a year—what happened to the other 48 weeks? Plan sponsors need to offer webinars or other communications throughout the year.”
“I’m a strong believer that messaging should come from ‘surround sound,’” Costo said. “Employees should receive touchpoints from all partners. Our communications team believes at least four touch points increase engagement.” She suggested that plan sponsors offer different communications throughout the year that are customized to employee culture and tone.
“Everyone responds differently to different communication types. What works for one might not work for another, so there needs to be variety in communications,” Costo said.
Massey suggested plan sponsors consider ongoing “drip” campaigns with little nuggets of information throughout the year. “Even if employees don’t act at that time, you are keeping HSAs top of mind so employees will be more engaged at open enrollment,” he told attendees.
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