HSAs Can Help Employers Rein In Medical Costs

A study shows that employees in high-deductible health plans are foregoing care because of the cost, and this could result in more catastrophic and disability claims.

More and more employers are offering high-deductible health plans, but research suggests some employees lack the knowledge needed to understand their benefits and take full advantage of them.

Even though the number of employers offering high-deductible health plans (HDHP) seems to be on the rise, three out of five employers don’t offer a health savings account (HSA) alongside these benefits, according to research by The Guardian Life Insurance Company of America. The company adds that “this is especially true of businesses with fewer than 50 employees—a segment that accounts for nearly 30% of all working Americans.”

The study also suggests that employees with HDHPs require “more support and education in the workplace to understand their options and to mitigate longer-term health risks.”  

A health savings account (HSA) offered in conjunction with an HDHP enables employees to set aside pre-tax dollars to cover out-of-pocket medical expenses. This is important to note considering the rising costs of health care and research that indicates employees have trouble understanding their employer-sponsored benefits.

Employers may also contribute to their employees’ HSA to provide a base level of funding. However, Guardian’s study notes that even when employees have access to HSAs, many are unsure of how they work or how to fully utilize them.

According to Guardian, three in five workers are unable to pay a $3,000 out-of-pocket medical expense. Faced with such an expense, the study found, 37% would have to make a deal with the provider to pay over time, 34% would have to put the bill on a credit card, 9% would ask for a loan from friends/family, and 6% would take a bank loan.

In light of rising out-of-pocket costs, several employees reported that they did one of the following in the past year: skipped a doctor visit, delayed a recommended procedure or surgery, failed to fill a prescription, or avoided a blood test or X-rays.

“The study reveals a correlation between high out-of-pocket medical costs and delaying or ignoring medical care,” says Dave Mahder, vice president and chief marketing officer of group and worksite markets at Guardian Life. “HDHPs help employers rein in medical costs, but potentially at the risk of higher catastrophic medical and disability claims in the long term. Employers offering HDHPs can help employees fund out-of-pocket expenses through health savings accounts and supplemental health benefits, but there’s still room for improvement.”

These findings are from Guardian’s “A Crack in the Foundation,” the first set of findings from the fourth annual Guardian Workplace Benefits Study. The full report can be found online here.