Many employers have just started to use card-based systems to help employees draw on flexible spending account funds.
Now, some employers are moving up to cards with “purse” or “bucket” features, so that they can use the cards to administer the new health savings accounts.
Obviously, letting employees get to FSA or HSA funds with a Visa or a MasterCard payment card enhances the customer experience. Offering payment cards also is a concrete way to advance the effort to create a “consumer-directed health care” system that gives individuals more control over how their health care dollars are spent.
The question is this: Once employees have the payment cards, how do you encourage them to be smart health care consumers?
Under current law, when employees contribute income to FSAs, they must “use it or lose it” by the end of the year.
Employees who have HSAs or other non-FSA personal benefit accounts, such as health reimbursement arrangements, usually can roll over unused account funds from one year to the next.
When employees understand the value of keeping funds in their HSAs and HRAs, they will negotiate carefully and be frugal with their funds despite access to payment cards.
The downside is that, for those consumers who are spenders, not savers, payment cards give them easier access to their account funds.
An even more common challenge may be the need to overcome the employee “copayment mentality.” Too many employees think that an office visit really costs $10 and a generic prescription really costs $5.
Employers and their benefits advisors can get around these problems by setting up a system of payment card buckets that allows employees seamless access to funds but encourages them to spend the funds wisely.
The card vendor can help employers meet their goals by using electronic payment systems to “filter” transactions by using the Merchant Category Code assigned to each terminal.