Using Data to Measure the Financial Wellness of your HSA Program

For many employers, their benefits package can be a huge investment in their employee population. On average, benefits account for 29.5 percent of an employer’s cost for their employees’ compensation (SHRM). With an investment that large, it’s important to make sure that your benefits package is delivering the results you want by increasing employees’ physical, mental, and financial wellness. 

Your health savings account program is no different. In fact, with HSAs it may be even more important. HSAs have unique tax advantages that make them the perfect benefit to improve employees’ financial wellness today, tomorrow, and into retirement, giving you a more engaged and satisfied workforce.

We get it. Without access to data, it is incredibly difficult to get the insights you need to make decisions about your benefits offerings. That’s why it’s important to partner with an HSA administrator that will provide actionable data to help you optimize your plan. 

Let’s look at some of the ways you can use data to:

• Identify employee engagement trends to promote utilization
• Inform your employee benefit planning process
• Benchmark your benefit offerings against similar employers

Goal # 1 – Identify employee engagement trends to promote utilization

Your HSA program can’t achieve the desired outcomes unless your employees open and use their accounts. Using analytics, you can determine how engaged your employees are with their HSAs and where your company may want to drive engagement with additional education.

Participation

According to the Society for Human Resource Management (SHRM) article “Employees Still Perplexed by HSA Plans During Open Enrollment,” approximately 33% of people enrolled in an HSA-eligible health plan have not opened an HSA. This means that a lot of people are missing out on the benefits of an HSA. How does this compare to your employee population?

Analytics can help you find out. By comparing the employees enrolled in the HSA-eligible health plan, also known as a high deductible health plan or HDHP, with the employees who have opened an HSA, you can determine your participation rate.

If you are seeing a similar trend to what SHRM reported among your employees, you may need to provide additional education about what an HSA is and how participating can provide additional financial security for years to come. 

Contributions

It is important to analyze HSA contribution trends as well. If employees understand the value of an HSA, you expect to see employees making contributions to their accounts. Even a small amount contributed each pay period will allow employees to save on taxes and begin to build a balance that can be used to pay healthcare expenses. 

This measure is still important for employers that contribute to employees’ accounts. Ideally, you will want to see employees contributing over and above the amount they receive from your company rather than simply spending the money you provide. This will allow them to build a larger balance in case of an expensive illness or injury.  

To evaluate the wellness of your HSA plan from a contribution standpoint, you will want to view contribution trends over the course of the year, and if possible, year over year, to see if employees are maximizing the value of their accounts. 

If this is an area where you would like to see improvement, introducing a decision support tool and/or financial calculator can help employees better understand the potential for tax savings and balance growth by starting or increasing their contributions by even just a little bit.

Savings Rate & Readiness

Next, we recommend looking at two related measures: Savings rate and readiness. Savings rate is the percentage of the contributions made to the account that are retained in the account and not spent. Readiness is a measure that indicates how well employees would be able to pay a significant healthcare expense. 

Why is this important? According to a study from the Kaiser Family Foundation (KFF), 41% of adults are presently in debt due to health and/or dental expenses. Worse, 79% of those individuals are delaying care or medications due to the expense. 

To be financially ready, HSA participants should consider the following readiness goals:

• Saving enough to cover their health plan deductible
• Saving enough to cover their health plan out-of-pocket maximum
• Saving for future expenses, including expanding families and scheduled surgeries 
• Saving for retirement

Many people start with saving to cover their deductible and work their way to saving for retirement in subsequent years. 

Tools that help employees estimate their expected health care usage can help them estimate their need for HSA savings to cover out of pocket expenses. They should also understand the expense that could result from a serious unexpected illness or injury and how HSAs can provide money to pay those expenses while remaining current on rent, car payments, and other bills.

Goal # 2 – Inform your employee benefit planning process

As we discussed earlier, benefits are the second largest expense employers pay as part of their employees’ compensation programs. And, these costs continue to rise year after year. How do you control costs while continuing to recruit, retain, and reward employees?

To make confident, informed decisions, you need data. Let’s look at some of the ways data about your HSA plan can help you.

Health insurance plan designs

According to the article, Health Insurance Costs Are Squeezing Workers and Employers, “The annual premium for individual coverage has risen more than $225 per year on average, and family coverage has risen more than $700 per year on average from 2010 to 2022.” To combat increasing premiums, many employers are looking to raise the deductibles and out-of-pocket maximums for their health plans, but what impact will this have on employees?

This is another area where HSA plan analytics can help. When evaluating new plans with higher deductibles and/or out-of-pocket maximums, you can consider the readiness of your employees to meet this expense if they were to become seriously ill or injured. Knowing your employees have the money available in case of a large claim can help you feel confident about making the change and allowing everyone to benefit from lower premiums while still having protection from a catastrophic claim. 

Enrollment strategies

Your enrollment strategy can impact the participation rate of your employees. By making enrollment as streamlined as possible, you remove a barrier to opening an HSA that causes people to forgo the benefits of this account type. 

If you’re seeing lower participation in your HSA than in your HSA-eligible health plan, it might be smart to review options to make enrolling easier. A strong HSA administration partner will help you review your participation rates and create a plan to increase the percentage of employees opening an HSA.

Contribution strategies

Your contribution strategy can also be impactful on employees’ behavior and encourage or discourage employees from enrolling and/or putting in additional funds of their own. Your contribution strategy includes not only the amount that your company contributes to employees’ accounts, but also the frequency of the deposits to employees’ accounts. 

By reviewing HSA plan analytics, you can review employees’ contributions throughout the year to determine whether this is an area of opportunity where you want to drive greater results. And, trend analysis can show you whether the changes you’ve made are driving the results you want.

Goal # 3 – Benchmark your benefit offerings against similar employers

In a competitive job market, it’s important to know how your HSA program stacks up against similar employers who may be competing with you for top talent. How many offer an HSA? How many make contributions to their employees’ HSAs? If contributing, what is the average contribution amount? And, to get the most useful data, you will want to be able to filter down to companies in the same industry, size bracket, and state.

All these data points will help you ensure that your program is competitive so you can continue to attract, retain, and reward top employees.

Conclusion

Access to HSA engagement and utilization data is key to being able to optimize your HSA program – for you and for your employees. The right HSA administrator will help you identify trends and create a plan of action with the tools and resources you need to help your employees get the most from their accounts and help you increase the engagement, satisfaction, and wellness of your population. Want to see what Associated Benefits Connection can do? Contact us today.

For existing Associated Benefits Connection employers, contact Employer Services at 800-270-7731 or EmployerServices@AssociatedBank.com

For employers wanting to learn what Associated Benefits Connection can do for you, contact Sales at 800-991-7703 or BenefitsConnectionSales@AssociatedBank.com