Case Study: An Employer’s Successful Implementation of an HSA Qualified Health Plan Option

In last month’s HJI newsletter and benefits blog, we discussed the general principles behind Health Saving Account (HSA) and High Deductible Health Plans (HDHPs) and why they are becoming more and more common in our local market.  Today, we are going to highlight one employer’s success story in implementing an HSA Qualified Health Plan as an alternative option to their traditional HMO plan and the best practices they applied to achieve these results.

Many of our HJI clients and employers have begun to implement an HSA Qualified Health Plan into their benefits program as an additional option instead of simply replacing a current lower deductible plan.  By offering an HSA plan as an alternative option and not a complete replacement, employees are provided an additional choice that could more closely meet their health insurance needs depending on their income, health, and current life stage. 

Prior to working with HJI, the employer in this case study traditionally offered one standard HMO plan for their local employees and a PPO option for a few remote employees who lived outside of the primary service area.  Each year, they received a premium increase of 8-15%, and periodically adjusted deductibles, co-pays, and out of pocket maximums to shift some additional cost onto the employees.  Employees’ contributions had consistently been set at 25% of the monthly premiums. (This scenario is all too familiar with many of the prospective clients that we meet.)

In the most recent renewal, this employer received a 9% premium increase to the HMO and PPO plans.  At that time, they had also started working with HJI as their benefits advisor.  One solution that we brought to them was offering an HSA-Compatible Health Plan as an additional option for employees. 

In comparing the proposed premiums between these two plans, the HSA plan was over 30% less expensive than the traditional HMO plan.  This allowed the employer to make a significant contribution to employee’s HSA account and eliminate the employee contributions entirely while still retaining savings to their overall cost of providing health insurance. 

The employer elected to maintain the traditional HMO health plan benefit levels with 25% employee contributions, while adding the HSA-Compatible Plan as an alternative option at 0% contribution by the employee. In addition, they shared some of the additional employer premium savings by contributing $500 into each employee’s HSA account for those who signed up for the HSA/HDHP plan.

Often financial incentives alone will not be enough to cause your employees to re-evaluate their plan selection and make the best choice for themselves and their families.  Here are a few best practices to consider when rolling out an HSA-Compatible Plan option.

HSA Program Design

• Simplicity is important. As in our case study, starting with simply a HSA-Compatible Plan is key to getting employee understanding and buy-in.
• Avoid the phrase “High-Deductible Plan.”  Use positive language in describing the plan, such as HSA-Compatible or Lower Premium Plan.
• Include front loaded employer contributions to the HSA fund to reduce the initial deductible and co-insurance exposure for the employee. Employers who contribute to HSAs also demonstrate their commitment to these plans.
• Mandatory re-enrollment during open enrollment. Make your employees “re-select” their health plan.  By forcing them to re-enroll, you are more likely to get them to fully evaluate their options. 

Employee Communication

• Start communicating with employees early. Don’t wait until open enrollment to introduce this new plan concept and design. 
• Communications should come from executives and should cover why the change is being made, focusing on the benefits to the employee, including lower premiums and more control.
• Provide decision support tools. Use real life examples specific to their plan options. Show them visually, through scenario-based examples, what the out of pocket cost and contributions would be for various individuals depending on their life-stage and healthcare needs.  Illustrate the potential future value of an HSA account as well as the immediate tax savings.

HSA Administrator

• Select a preferred HSA administrator and cover the administrative cost of opening and maintaining these accounts. This will ease both administration and implementation concerns.
• HSA administrators should be able to provide implementation expertise, communication materials and support, and comprehensive reporting to help the HR team manage the overall process.
• Technology is key.  In addition to providing debit cards, many HSA administrators give account holders the ability to view and pay claims directly online.  Allow employees to manage their HSA account, store their receipts, and view their investment choices from their desktop or phone via a mobile application.

The end result for the employer in the case study was a 35% migration to the HSA-Compatible Plan. The total premiums paid by the employer, including the employer contributions to the HSA plan, was over 15% less than the standard renewal and 6% less than total premium spend from the prior year.  The employer saved over $100,000 by simply adding this additional HSA option!

Our industry expertise and experience in HSA-Compatible Plans has yielded successful programs for many of our clients.  Considering these types of plan options can help ensure that your organization’s benefit package is competitive in the marketplace, while providing the best value for both your employees and your company. 

For more information on HSAs, and to learn more about how Hausmann-Johnson Insurance assists our clients in evaluating these plans, please contact Jesse Oberloh, Account Executive, at jesse.oberloh@hausmann-johnson.com or a member of your dedicated Hausmann-Johnson service team.