Health savings accounts partnered with high-deductible health plans continue to grow as a popular option for employers and employees seeking an economical and convenient coverage option. However, the time has come to move beyond simple administration of these accounts to provide a more meaningful strategy for employers.
While HSA enrollment continues to grow, traditionally employers have had little insight to gauge the success of their HSA program 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.
Having recently passed the 10th anniversary of the enabling legislation, the industry, employers and brokers/agents can move HSAs forward with the use of insightful reporting and analytical tools.
Essentially, account reporting can provide the insight necessary for employers to not only see exactly how their employee accounts are being used, but also allows them to react and positively impact a desired outcome. We view reporting as a three-step process:
First, the employer will need to obtain the data in a usable format. While this sounds straightforward, many administrators have yet to develop or supply adequate reporting tools and analysis. It is important to consider this capability when selecting an HSA administrator.
Second, the data must be analyzed and applied to the employer’s specific situation.
Third, the employer needs to take action based on the data.
These steps appear fairly straightforward, but the norm with data reporting has often been to review and file the data. The third step is less likely, if ever, completed when there are limited resources to implement change partnered with a lack of understanding of the data.
To avoid stalling at step three, it is important to understand the reporting data. Reporting provides aggregated data that looks at the actual numbers month-to-month, allowing a better understanding of account holders and 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, but it doesn’t have to be. Look at each data point as if it were the answer to a question. Each question can be answered through the data and tracked over time. It is important to analyze reports with the employee in mind.
Common employer questions: How are employees using their accounts? 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 their habits for contributions and distributions?
In addition to typical reporting metrics, we have identified key data metrics 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, and remaining balance to contributions.
Data reporting can also help identify and classify different behaviors of employee account holders, 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, they can promote the importance of building long-term wealth in their HSA.
To effectively implement change based on reporting data, employers need a plan for what they hope to accomplish within their HSA plan offering — what problem they need to tackle.
We identified a six-point plan to better manage this process: 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 and make adjustments.
By analyzing trends over time, employers can review their progress impacting change. And 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.
HSAs are a significant long-term savings and cost-containment vehicle for health care expenses, and as our industry moves into the next decade of HSAs, we need to focus on tools that create measurements of success and execute plans that improve the future health and wealth of employees.
Dennis Triplett is CEO of UMB Healthcare Services, a division of UMB Financial Corp.