Health Savings Accounts: What’s next?
(Editor's note: This is the first of two parts.)
Health savings accounts (HSAs) partnered with high-deductible health plans (HDHPs) continue to grow as a popular option for employers and employees seeking an economical and convenient coverage option. However, the time has come to move beyond the simple administration of these accounts to provide a more meaningful strategy for employers utilizing HSAs with HDHPs that will ultimately benefit their employees.
While HSA enrollment continues to grow, traditionally employers have had little insight to gauge the success of their HSA program beyond viewing basic enrollment numbers. How employees are using their accounts can have a dramatic impact on an employer’s overall HSA strategy and benefit plan.
Having recently passed the 10th anniversary of the enabling legislation for HSAs, the industry, employers and brokers/agents all have the opportunity to move HSAs forward with the use of insightful reporting and analytical tools.
Essentially, account reporting can provide the insight necessary for employers to not only see exactly how their employee accounts are being used, but also allows them to react and positively impact a desired outcome. In order to fully realize the benefits of these accounts and influence employee behavior to improve wellness and ultimately lower health care costs, employers need to have the supporting data and applied analysis to make those informed changes.
We view reporting as a three-step process:
- First, the employer will need to obtain the data in a usable format. While this sounds straightforward, many administrators have yet to develop or supply adequate reporting tools and analysis. It is important to consider this capability when selecting an HSA administrator.
- Second, the data needs to be analyzed and applied to the employer’s specific situation.
- Third, the employer needs to take action based on what the data is revealing.
These steps can appear fairly straightforward, however, the norm with data reporting has often been to review the data and file it away. The third step is less likely, if ever, completed when there are limited resources provided to implement change partnered with a lack of understanding or unfamiliarity with the data.
Understanding the data
To avoid stalling at step three and to take action, it is important to understand what the reporting data means. Reporting provides aggregated data that looks at the actual numbers from each employer group month-to-month which allows a better understanding of the habits of the accountholders and any existing trends. By better understanding those trends, employers can react and influence employee health decisions leading to improved wellness and cost containment.
Reporting can provide a wealth of data, including:
- Accounts – enrollment, open and closure
- Balances – total, average and tier breakdowns
- Contributions – employee and employer
- Distributions – amount, frequency and method
- Investments – number of accounts and balances