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What if an Employer Had a Disappointing HSA Program?

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If you have a client who has been burned by a disappointing health savings account plan option before, trying to advise them on the strategy a second time can feel impossible.

But a few subtle changes in messaging and plan design can make a world of difference, and even your most reticent employers—and their employees— will be able to see the value in adopting HSA-eligible plans.

(Related: Surgeon Prescribes Cash for U.S. Health Problems)

First, when we talk about a “bad experience” with HSA plans, generally, we’re describing an employer who experienced low enrollment. Low enrollment constricts HSA savings, which can be significant. Consulting firm Mercer found HSA-eligible plans cost 22% less than traditional plans, even factoring in employer contributions to HSAs.

There are a few common pitfalls that lead to poor enrollment, and a few key tweaks to communication strategy and plan design can meaningfully improve the rollout and adoption of HSA-eligible plans for your clients.

Messaging Matters

When it comes to HSA adoption, messaging matters. Did your client previously refer to the HSA plan as a “high-deductible” plan? That’s the first mistake. When working with your client, you should refer to the plan as the “HSA-eligible plan,” and advise her to do the same. The traditional plan should be called the “co-pay plan.”

In announcing the new plan option, the employer should tell employees right off the bat that the network and the payroll deduction will be exactly the same between the HSA-eligible plan and the co-pay plan. More on the plan design later, but it’s important to lead with this when speaking to employees.

Why is this important? If employees see that the HSA-eligible plan costs less, they will automatically think it is a worse plan. Many employers and brokers make the mistake of thinking employees will want to save an extra $10 or $15 per month, but that amount is negligible to the employee if they think they’re downgrading their insurance.

As soon as the employer announces there is a new plan option, everyone will be wondering if it’s a downgrade and expecting the worst. Allay those fears by addressing them immediately: ”Everyone, we’ll have a new, HSA-eligible plan option this year. It will have the same network and cost the same amount as our current plan. The difference is in the plan design.”

Improving the Plan Design

Speaking of plan design, this is the next piece brokers have to get right to bring an HSA-averse employer back on board.

Again, you don’t want the employer to charge less for the HSA-eligible plan, because a cheaper plan will actually deter enrollment, not bolster it. Instead, you should advise the employer to share any savings with employees through HSA contributions.

Second, do your best to have the same deductible and out-of-pocket maximum on the HSA-eligible plan. The goal here is simplicity in plan design.

In this scenario, your employer is able to explain “Okay, the network and paycheck deduction are the same between the HSA-eligible and copay plans, so you’ll have to decide based on the plan design. Under the HSA-eligible plan, you have a $4,000 deductible, but we’ll contribute $800 toward that figure. After that, insurance covers everything.”

Then, when the client begins explaining the much more complicated copay plan, employees will naturally gravitate toward the simpler HSA plan.

When explaining the differences in plan design, it is important to use concrete healthcare scenarios as examples. “Here’s how the plan looks if you have the occasional doctor’s visit and one prescription. Here’s what it looks like if you have a high-cost episode. Here’s what it looks like if you have multiple prescriptions.”

A lot of brokers and employers spend all of their time explaining HSAs to employees, focusing on the tax advantages and how to open accounts. But they hardly spend any time on the actual HSA-eligible plan, which is what employees are really focusing on when they make their decision.

When employees have to choose based on plan design, not networks and payroll deductions, HSA-eligible plans become far more attractive. Explaining the benefits of this strategy, as well as your brokerage’s plan to support the client in rolling it out, will be to key to selling averse employers on HSA plans. 

— Check out How Do HSA Plans Affect Low-Wage Workers? on ThinkAdvisor.