Health savings accounts and health reimbursement accounts can reduce some of the burden employees bear for increased health care expenses while at the same time cutting costs for the employer.
To qualify for an HSA, which is funded like an IRA, the employee must opt for a high-deductible health plan, or HDHP. HRAs don’t have the same requirement, and some companies are starting to use them in place of traditional health insurance options.
While these savings plans are nice perks and should theoretically prompt employees to take better care of themselves — the healthier you are the less you spend and the more you can save, in the case of the HSA, at least — the plans’ underlying principle is not wellness or health promotion, per se.
“Ideally what companies want with these types of programs is for their employees to become smarter consumers of health care,” says Heather Walker, health promotion manager at EXOS. “They’re a perk, of course, but through HSAs/HRAs, employers are hoping people will plan ahead, think twice, and make better choices. The problem is that they don’t automatically incorporate an aspect of trying to be healthier.” In the case of the HSA/HDHP option, they may even prompt people to scrimp on health care.
On-site health promotion emphasizing the importance of preventive care, or even offering the care in the workplace, can help fill the gap in HSAs and HRAs.
When saving money harms health
A 2016 study from the Employee Benefit Research Institute looked at a large Midwestern company — with more than 150,000 employees — that had recently enrolled employees in an HSA/HDHP program. The results may surprise you. Compared to people in a normal preferred provider organization, employees enrolled in the HSA plan reduced their spending on certain preventive services, including flu shots and colon and cervical cancer screenings, despite the fact that these were free services not subject to deductibles or copays. This was especially true for lower-income workers. On-site health promotion emphasizing the importance of such preventive care, or even offering the care in the workplace, can help fill this gap.
Employers need to realize that HRAs and HSAs are only part of an overall benefits package.
Linking wellness with smart spending
“Some progressive companies are starting to tie their health and wellness promotions to their HSAs/HRAs,” Walker says. They may offer to partially fund the account and link the funding to program participation, such as filling out a health risk assessment or participating in a smoking cessation program. “It’s smart for the employer since they may be paying less for insurance premiums and they’re creating healthier, more engaged employees.” According to a 2015 Kaiser Family Foundation report, 76 percent of large firms that offer incentives for completing a wellness program include contributions to health-related savings accounts.
Like flexible spending accounts, both HSAs and HRAs require that any disbursements from the accounts be only for “eligible medical expenses.” Health-focused purchases like buying unprocessed, whole food; going to the gym; taking an exercise class; working with a trainer or nutritionist; or enrolling in a weight-loss program aren’t usually considered IRS-defined eligible expenses. The Personal Health Investment Today Act, which has been working its way through Congress, may change that, so stay tuned. Banning those types of expenses from HSA/HRA reimbursement makes it harder to use them as an incentive to adopt better habits, but again, a good corporate wellness program can make up for that, at least to a certain degree.
In the end, employers need to realize that the savings accounts are only one part of an overall benefits package and that they don’t take the place of health and wellness promotion and education. “If you can figure out a way to integrate the programs, then everybody wins,” Walker says.
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