How to Drive HSA Adoption: Mitigate Employee Risk with Plan Design
Where we last left off in this series, the key takeaway was “money talks”: finding your employer contribution sweet spot incentivizes further employee Health Savings Account (HSA) uptake. But after the right employer contribution is in place, there’s a third step you can take to boost adoption. Let's look at what you can do to mitigate employee risk with your plan design.
- 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
Pay 100% of the High-Deductible Health Plan (HDHP)
Going all-in and paying 100% of the HDHP premium can significantly reduce the perceived financial risk of a high-deductible health plan. Optimize your plan design so employees can clearly identify the value-difference between health plan choices:
- Lower deductible plans will have an employee cost-sharing portion
- The high-deductible plan won’t (due to the lower cost of the premium)
Benchmark your employer premium contribution to a set amount that enables the HDHP plan to be free with an HSA “spillover.” Doing so is the optimal way to set up your benefits package.
In the example:
- The employer contribution is baselined to the richer, low-deductible PPO;
- 85% of the employee-only low-deductible premium is paid by the employer;
- This amount more than covers the lower premium of the high-deductible plan;
- Now the high-deductible plan is essentially “free” for the employee;
- There’s a potential for any overage to “spillover” to the HSA.
Next up, Employee Education
As always, if you’d like help boosting your HSA participation, we're happy to provide a free consultation. Lumity has experience driving significant HSA participation for companies like Greenhouse, Bitly, GoFundMe, and SquareTrade.
Also, we invite you to contribute to our ongoing HSA research.