Viewpoint: The Future of HSAs
Health savings accounts (HSAs) partnered with high-deductible health plans (HDHPs) continue to grow as a popular option for employers and employees seeking an economical and convenient coverage option. The time, however, has come to move beyond the simple administration of these accounts to provide a more meaningful strategy for employers utilizing HSAs with HDHPs that ultimately will benefit their employees.
While HSA enrollment continues to grow, traditionally employers have had little insight to gauge the success of their HSA programs beyond viewing basic enrollment numbers. How employees are using their accounts can have a dramatic impact on an employer’s overall HSA strategy and benefit plan.
As we approach the 10th anniversary of the enabling legislation for HSAs, the industry, employers and brokers/agents all have the opportunity to move HSAs forward with the use of insightful reporting and analytical tools.
Essentially, account reporting can provide the insight necessary for employers not only to see exactly how their employee accounts are being used but also enables them to react and positively affect a desired outcome. To fully realize the benefits of these accounts and influence employee behavior to improve wellness and ultimately lower health care costs, employers must have the supporting data and applied analysis to make those informed changes.
We view reporting as a three-step process:
- First, the employer needs data in a usable format. While this sounds straightforward, many administrators don’t supply adequate reporting tools and analysis. It’s important to consider this capability when selecting an HSA administrator.
- Second, the data need to be analyzed and applied to the employer’s specific situation.
- Third, the employer needs to take action based on what the data is revealing.
These steps can appear fairly straightforward, however, the norm with data reporting often has been to review the data and file it away. The third step is less likely, if ever, completed when there are limited resources provided to implement change coupled with a lack of understanding or unfamiliarity with the data.
Understanding the Data
To avoid stalling at step three and to take action, it’s important to understand what the reporting data means. Reporting provides aggregated data that looks at the actual numbers from each employer group month-to-month, which allows a better understanding of the habits of the accountholders and any existing trends. By better understanding those trends, employers can react and influence employee health decisions leading to improved wellness and cost containment.
Reporting can provide a wealth of data, including:
- Accounts—enrollment, open and closure
- Balances—total, average and tier breakdowns
- Contributions – employee and employer
- Distributions—amount, frequency and method
- Investments—number of accounts and balances
Analyzing the data can appear cumbersome initially, but it doesn’t have to be. We have found it helpful to look at each data point as if it were the answer to a question. Each of these questions can be answered through the data and can be tracked over time. It’s important to analyze the reports with the employee in mind.
Some common employer questions include:
- How are employees using their accounts?
- Are the employees using their accounts more often to spend or save?
- How much does an employer have to fund, and for how long?
- What is the level of employee engagement in the plan?
- What are the employees’ habits for contributions and distributions?
In addition to typical reporting metrics, we also have identified several additional key data metrics that allow for tracking trends. We view these metrics as probably the most significant aspects of account trends to monitor and as vital for all employer groups. These include:
- Percentage of accounts with employee contributions
- Contribution-to-distribution ratio
- Distribution frequency versus benchmark average
- Remaining balance to contributions
Data reporting also can help identify and classify different behaviors of employee accountholders, which is helpful in creating tailored communications. For example, if employers identify that employees regularly spend their account balances and aren’t realizing the benefits of saving in the account, they can implement a tailored communication plan on the importance of building long-term wealth in their HSAs.
To effectively implement change based on the reporting data, employers need to have a plan for what they hope accomplish within their HSA plan offering—what problem they need to tackle. We have identified a six-point plan to better manage this process, including the following steps:
- Identify the item/problem to impact
- Choose the best way to impact the result
- Identify the measure of success
- Deploy the necessary resources
- Regularly review
- Make adjustments
By analyzing the reporting trends over a period of time, employers can review their progress impacting change in their HSA plans.
Employers need to take the time to regularly view and understand their HSA reports. In addition, it’s critical to analyze the data to see what trends and opportunities for improvement exist. While many employers are strapped for time and resources, business partners, including HSA administrators and brokers/agents, have the experience and knowledge to help in driving positive change.
During the last decade, HSAs have proven to be a significant long-term savings and cost containment vehicle for health care expenses. We believe this is just the beginning. As our industry moves into the next decade of HSAs, we need to focus our attention on the tools needed to create measurements of success and execute on plans that can improve the future health and wealth of employees.
Dennis Triplett is CEO of UMB Healthcare Services, a division of UMB Financial Corporation, which delivers healthcare payment solutions, including custodial services for health savings accounts (HSAs) and private-label, multipurpose debit cards to insurance carriers, third-party administrators, software companies, employers and financial institutions. He can be reached at [email protected].