Some Constructive Criticism on Health Savings Accounts
The HSA is another tool in the employer health care arsenal, but it’s clear some employees just don’t want or need one.
I recently came across a blog on LinkedIn written by John Lowell, a consultant and actuary, titled “Perhaps Employees Just Don’t Want HSAs.”
I found this interesting because from the employer side, I often hear about the excellence of health savings accounts, how to convince employees that an HSA is right for them, how employees just aren’t educated on HSAs (but if they were, they’d definitely want one) and on and on.
From the employee point of view, I’ll read a different perspective. For example, already sick people with regular medical costs (prescriptions, cancer treatments, etc.) can’t save all that money and allow it to accumulate in an HSA. And how about employees living paycheck to paycheck?
The HSA may be a solid option for certain types of employees (as one snarky commenter pointed out, “the young and the healthy or the old and the rich”) but not all of them. Why should employers market it as an option for people who aren’t necessarily going to be able to utilize it? And how would raising the threshold for how much an employee can contribute help anyone except those who already can contribute up to the threshold?
I think about a story I read a few months back about a man whose wife had cancer. His company switched from offering a traditional health care plan to only offering a high-deductible health care plan with an HSA, and it was not beneficial to him. He couldn’t save money over time; he was already spending it on medical costs.
My takeaway on this: If the trend in benefits is to be more personalized and structured toward the individual and their needs, why try to communicate the exact same type of health insurance plan to everyone? Might it be possible that some employees understand the HSA but still don’t want it? Why not offer both the HDHP and the traditional health plan so there’s truly a choice?
And, yes, I know one popular HDHP argument is that people do a crappy job at saving and need more financial incentive to save more. I’m not saying everyone’s individual saving habits are angelic, but you also can’t ignore the bigger-picture, structural impediment to saving. Wages are, in general, staying stagnant while costs, like housing and transportation, increase.
Related, I’d like to mention a pitch a got a while back about how messaging matters when it comes to a successful HDHP/HSA strategy. It noted data from the Kaiser Family Foundation that at least half of U.S. employers offer an HDHPs but only 29 percent of employees are enrolled in one.
The suggested solution? Don’t call it a “high-deductible” health plan. Call it an “HSA-eligible” plan and remind people that the copay is smaller than the traditional plan.
That’s not a clever communication strategy; that’s purposely misleading an employee in order to encourage them to do what you want them to do. Yes, the information technically is true. But there is a line between nudging someone toward a decision and misdirecting them to it. It ultimately should be the employee’s choice, based on facts and based on what’s best for them, not based on changing names to make something unpopular sound more friendly.
I’m not against the HDHP/HSA. I know it has many benefits for employers and for a segment of employees. I know people who have been in the workforce for 30 years and benefit from having an HSA, and very healthy people in their early 20s who have one and have been able to save up a lot of money.
On the other side, I think of a friend in the health care field who makes a small salary. (Why even entry-level positions in health care make so little is something I’ll never understand.) She discovered that she needed a certain procedure ASAP, and the cost of the procedure didn’t even hit the deductible. Enter major medical debt! For somebody who doesn’t make enough to contribute much to a regular savings account, how would access to an HDHP and HSA help in this situation?
What I am against is adopting the idea that the HSA is the best option for every employee and that employers have the responsibility to convince the unconvinced otherwise — especially if it comes to purposely misleading employees.
Andie Burjek is a Workforce associate editor. Comment below, or email at firstname.lastname@example.org. Follow Workforce on Twitter at @workforcenews.