Is Your HSA Plan a Barrier to Care?
The Health Savings Account or HSA is a bank account. It’s a perfect way to save money for future healthcare expenses. An IRS-qualified High Deductible Health Plan is the requisite point of entry necessary to enroll in the actual banking arrangement of the HSA. But, which part of the equation is driving your strategy?
Do you contribute employer funds to the Health Savings Account if your employee elects a qualified health plan? Or, is all of your focus and monetary commitment spent on the actual health plan?
Or, has your focus changed over time as your company has dealt with ugly year over year increases in health insurance costs?
The HSA is a tool of wealth if you have it.
The transfer of funds to an employee through the HSA contribution is a tax-free transfer to the employee.
And for that employee, the ability to spend any contribution from your company is also a tax-free way to pay for healthcare expenses. In addition, there is an option for the employee to also set away tax-free funds into that same HSA account. That works as long as your company isn’t contributing so much money that you’ve maximized the allowable HSA contribution limits.
Owners, executives, and managers are typically great candidates to save money through the tax favored status of an HSA account. Plus, if we are speaking in stereotypes, such examples of higher wage earning employees also likely have at least a small stash of money accessible to help cover inconvenient healthcare expenses that get applied to that high deductible imposed by the governing health plan structure.
Can the High Deductible Health Plan with an HSA be a barrier to care?
While the HSA funds are a huge benefit, sometimes the high deductible health plan paired with it can prevent people from seeking care. Even though they may have funds in the HSA account to cover prescriptions, office visits, and testing prior to hitting their deductible, the perceived out of pocket expense can be scary. To ease this, health plan participants need education on how the deductible works and how the HSA funds work. Specifically, what goes to deductible? Does a well-woman exam? How about vaccinations? And, they need education on eligible HSA expenses. All prescriptions? How about over-the-counter medications?
Also, the price differential between HSA plans and copay plans in the last 5 years has continued to shrink. This has made the financial decision to contribute money into an HSA plan more difficult for employers. For an HSA to be successful for the end-user, there has to be some funding to the HSA from the employer. $600 a year/50 a month is a good minimum employer contribution because it will cover most visits (after preventive care) and prescriptions.
In closing, HSA plans are still a great tool with the right employee population, funding, and education around the plan. But, if employees are delaying or skipping care because of it, consider alternate plan options that may feel safer to them like a co-pay plan. And, Generous Benefits is here to walk you through that journey every step of the way.
