HDHPs have an Ugly Branding Problem
Traditional PPO plans saddle both employers and their employees with high monthly premiums. For this reason, many employers offer High-Deductible Health Plans (HDHPs) with lower premium costs—and then offer Health Savings Accounts (HSAs) to help employees reduce their current out-of-pocket expenses and self-fund future health care expenses.
Sounds good, but...
Employees find Health Savings Accounts "confusing", and HDHPs have an ugly branding problem. “High-deductible” sounds bad. It sounds expensive. (Some People Ops Pros we talk to circumvent the branding issue by calling them “low-premium” or “consumer-driven” plans. While this can certainly be a successful tactic, just be aware that the carriers still call them High-Deductible Health Plans).
And, even though the overall annual out-of-pocket cost is often substantially lower with an HDHP, an employee may experience an initial “sticker shock." It's a big change from the familiarity of a traditional PPO—where higher premiums tend to go unnoticed as a payroll deduction, and employees are used to paying a fixed copay for services.
"If something bad happens, I’ll have crippling debt."
With high-deductible health plans, employees pay expenses 100% out-of-pocket (OOP) until they hit their deductible, including the cost of prescriptions. In the mind of the employee, a high-deductible plan can feel risky. If something major happens on the health front, an employee gets hit with hefty expenses—especially early in the plan year.
There’s a limit to an employee’s financial exposure.
If something catastrophic occurs, a high-deductible health plan (HDHP) has an out-of-pocket maximum that depicts what a worst case scenario would look like. Understanding this cap can significantly reduce, or even remove, the perceived financial risk when the plan is paired with a Health Savings Account (HSA).
What You Can Do
Based on Lumity's research, these steps will drive HSA adoption:
- Step 1: Seed Early Adopters
- Step 2: Find Your Employer Contribution Sweet Spot
- Step 3: Mitigate Employee Risk with Your Plan Design
- Step 4: Educate Employees
It’s possible for both employers and their employees to spend less without sacrificing coverage.
The steps we've outlined are based on:
- Lumity research: over 400 professionals in HR and finance responded to Lumity’s 2018 HSA Survey,* and 97 professionals participated in our HSA market research calls. Companies ranged in size from 15 to 15,000 employees.
- Our clients’ results: Lumity’s benefits experts apply the steps outlined above to drive HSA enrollment for clients such as Greenhouse, Bitly, GoFundMe, Wealthfront, and The Linux Foundation.
*Our research is ongoing, and we invite you to contribute: take Lumity’s 2-minute HSA survey.
It’s entirely possible to beat the national average—by 50%
In 2018, Lumity clients beat the national average for HSA adoption by 50%. We achieved this using the steps shared above—plus one more. During the plan selection process, the Lumity platform provides personalized decision guidance. A side-by-side comparison helps an employee easily identify the plan that will best fit their budget and healthcare needs.
As healthcare costs continue to rise, HSAs will remain a powerful tool to reduce expenses. We hope you’ll share your results with us after you apply the steps to drive HSA adoption.
Or, you're welcome to contact us for a complimentary consultation. Lumity benefits experts will assess your HSA strategy and plan design so you’ll know how you compare to other companies in your industry and region.