When CommunityAmerica Credit Union introduced a high-deductible health plan with a health savings account for the 2008 plan year, 50 percent of its employees signed on.
“We never expected that level of participation the first year,” says Jean Claytor, vice president of human resources for the Lenexa, Kansas-based company. She believes that a strong communications plan focused on alleviating the fears employees might have about using an HSA while touting benefits played a large role in the plan’s success.
“It’s important to get employees beyond the perception that they are going to pay more for their health care costs out of their own pockets,” Claytor says. “We made sure that the high-deductible/HSA plan premium was significantly less than our other health option, and we emphasized the tax- and long-term savings benefits of using an HSA.”
Communicating with employees early and often during the upcoming fall benefits season is essential when introducing a high-deductible health plan with an HSA, says Bonnie Hauck Evelyn, national practice leader, employee benefits, for Cleveland-based CBIZ Inc.
“We spend a lot of time talking to our clients about the communications tools we offer or that they need to develop internally,” Evelyn says. “Some clients are producing DVDs to send home to the spouse, and, of course, they are doing a lot of employee meetings so the message is consistent.”
Evelyn says that some employees are fearful about prescription drug costs.
“These kinds of plans also tend to have separate deductibles for prescription drugs, which is an obstacle employers can address by contributing to the account for the first year or by providing diabetic supplies or zero copays on generics to ease the pain,” she says. “Employees need to understand what their out-of-pocket costs might be during the year, so financial modeling is an important part of any communications plan, as is education on what expenses are reimbursable and which are not.”
Last summer, Kansas City, Missouri-based Lockton Cos. began communicating to employees that they would have one option—a high-deductible plan with an HSA in the 2011 plan year.
Theresa Schnelle, vice president and manager of compensation and benefits at Lockton, says her team distributed educational communications bit by bit: “Here’s what it is, here’s how it works as well as the short- and long-term benefits.
“We wanted our 2,200 eligible employees to ask informed questions by the time we had open-enrollment meetings and not be so focused on the money aspect of the plan,” Schnelle says. “Our meetings went smoothly and so far we haven’t hit any rough patches.”
She believes that the key is to provide more information than less and be honest about why you are making a change. For Lockton, it was a result of health care reform and the costs related to it. Lockton contributed to its employees HSAs for plan year 2011 but has not made a decision yet about its contributions in 2012.
“We don’t anticipate short-term savings but in the long term we think that this plan will reduce our trend from double to single digits,” Schnelle says.
For CommunityAmerica Credit Union, the reason for implementing the high deductible/HSA plan in 2008 was simple: a heavy claims year in 2007 with a 100 percent loss ratio, which resulted in a potential increase in premiums of 30 percent. Claytor says the company was looking for a plan that would offset the high cost of health care for all participants. After enrollment in the plan remained at 50 percent in 2009, her team launched an aggressive education plan for 2010.
She says the company spent a lot of time demonstrating the high-deductible/HSA plan’s value through case histories and life-stage examples. They conducted group and one-on-one meetings to everyone enrolled in the preferred provider organization (132 employees) to ensure individual employees understood how the plan would affect them personally.
“Our participation increased to 70 percent for the 2010 plan year, and at that point I felt confident that we could migrate to a single high-deductible/HSA plan,” Claytor says.
To sweeten the offer, they enhanced plan benefits and offered to contribute to the HSAs in 2011.
“This year, the company contributed $400 individual/$800 family into employee HSAs or into their flexible spending accounts, if they are more comfortable with the ability to be reimbursed for expenses as of Jan. 1 using the FSA instead of waiting to accumulate dollars in their HSA accounts,” Claytor says. “I don’t want to portray that everyone in our organization loves using an HSA, but I know all of us were glad not to see increases in our medical premiums for 2011.”
More employers are embracing high-deductible plans with HSAs, with some tying them to wellness plans, says Todd Berkley, HSA business leader for OptumHealth Financial Services, the largest custodian of HSAs by asset size in the United States.
“Ten million people contribute to health savings accounts right now, and that number could easily increase to 12 million this year,” he says, adding that he’s seeing a lot of requests for proposal activity around high-deductible/HSA plans.
“I also see a deepening in account balance growth, which is a sign that people are beginning to understand how these accounts work and the value of using them for present tax savings and for future financial needs,” he says.
Employers considering a high-deductible/HSA plan need to gauge their employee population to determine if it’s a realistic option, but for small employers, it may be the only way they can continue to offer health insurance, Evelyn says.
“This is not a short-term strategy, but something employers need to think through and work toward,” Claytor says.
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