Posted: June 08, 2009
Providing health care in a tough economy
HSAs cannot be ignored when managing balance sheetsBy Dennis Triplett
During economic uncertainty, business owners are forced to look at what really impacts their bottom line and where meaningful changes can be made. Because health care benefits are often a major portion of a company’s budget, this is an opportune area to examine for efficiencies.
Business owners want to know how next year’s premiums will affect bottom-line profits. They want to know what kind of decisions they need to make now to mitigate the costs of tomorrow.
Employers are preparing for another hike in health insurance costs, somewhere between 6 percent and 7 percent, according to benefits consultants. That money cuts into operating margins and the ability to grow a business. And in a sluggish economy, that may be a burden the company can’t afford to shoulder.
Some employers have chosen to significantly raise employee health care premiums, deductibles, co-pays or pharmacy costs. Some are questioning whether to offer health insurance to their employees at all.
When weighing all the options for reducing health care costs, consumer-directed health care should be an option business owners consider.
Consumer-directed health care
Consumer-directed health care allows for employers to offer a high-deductible health plan partnered with a health savings account that shifts some of the cost burden to the employee, while still providing health care coverage. Created in Medicare legislation in 2003, HSAs are employee-owned, tax-advantaged accounts that can be used for reimbursement of qualified medical expenses. To qualify as a HDHP in 2009, a plan’s deductible must be at least $1,150 for self-only coverage or at least $2,300 for family coverage.
According to a survey by consultants Watson Wyatt and the National Business Group on Health, 51 percent of companies now offer employees HDHPs, up from 47 percent in 2008.
HSA funds grow tax-deferred, and as long as they are pulled for qualified medical expenses, funds can be withdrawn tax-free — or can stay in the account for future medical expenses. In 2009, employees could bank $3,000 for themselves or $5,950 for their family — and some employers even choose to seed these accounts to encourage participation in the health care plan.
As part of a HDHP, HSAs encourage employees to share the responsibility — and the rewards — for more closely monitoring their health and the cost of their care. Because they are invested in their own care, employees become better health care consumers and better consumers make better choices.
With a comprehensive plan grounded in prevention, employees can take charge of their health care, educating themselves about preventive care, generic drugs, disease management and wellness programs. Research shows, knowing how to make better choices leads to better health, and that affects not only the health of employees but also the health of the business.
What to look for
With HSAs, employees have a fundamental interest in proactively managing their own health that simply does not exist when the employer is the only one carrying the burden. But HSAs are not to be mistaken for checking accounts.
These accounts offer more than the opportunity to deposit and withdraw funds. HSAs should be built on a solid infrastructure that offers employees the tools, resources, and support they need to help manage their health care dollars.
A good custodian — and that could be a bank, brokerage or health insurance company — will offer investment capabilities, an online interface, customer service and compliance management. Many accounts come with comprehensive tools, such as contribution automation, unique debit cards and specialized call centers that provide time- and cost-saving benefits to employers and employees.
But it’s about more than just the account. Business owners should also look for a custodian who will help create an environment for better health with educational resources.
Establishing HSAs for employees is not just about helping them create a medical expense account — it’s about creating equity, building value and helping employees better manage their dollars and their health.
Dennis Triplett is CEO of UMB Healthcare Services, one of the country’s top providers of HSAs, FSAs and HRAs. He is also chairman of the board of the Employers Council on Flexible Compensation (ECFC) and Chairman of the HSA Leadership Council of America’s Health Insurance Plan (AHIP). Dennis may be contacted via email at Dennis.Triplett@umb.com or by phone at (816) 860-8230.