As the open enrollment period begins, business leaders are confirming the growing adoption by employers of Health Savings Accounts predicted earlier this year.
At the same time, job separation, overall economic concerns and a less than robust economy are driving many individuals to re-think their own healthcare insurance.
These dual trends are driving increased information search traffic on the Internet, switches in healthcare providers and the growth of custodial accounts associated with HSAs.
Information Strategies, Inc. (ISI) earlier this year predicted that the number of covered lives and accounts would double from January 2008 levels by the end of January 2009. These numbers appear well within reach while factors not considered, such as job dislocation, banking woes and higher unemployment are contributing to a higher than usual upheaval in the marketplace.
Based on talks and surveys with almost 500 HR and business leaders this month, there is heightened interest in HSAs, particularly as insurance providers have modified their offerings to reflect cost concerns and growing comparison shopping by companies and individuals.
A strong employer majority (61%) said they thought insurance providers were offering better HSA plans than last year while at the same time saying they were actively looking at alternative banking solutions.
Both employer and individual visitors to www.hsafinder.com, an HSA information site, were up 22% in September and 15% so far in October. Downloads of materials for employers and employees were almost double the traffic as compared to the same time last year.
More than 66% of employer respondents said they had spent more time choosing their plans for 2009 and have added resources to their enrollment programs going into the critical 4th quarter.
At the same time, 71% said they thought modifications in HSAs would occur in the next presidency, no matter who was the victor.
More than half, 55% said their agent/broker had offered an HSA component in their first presentations, up from just 25% in 2007.
Given the new rules, which enable companies to choose the financial institution in which to place monies for employers, 47% said they were looking at financial institutions for help in the open enrollment process.
Respondents also said they were looking at package offerings and leaning on their agent/broker to bring all of the pieces together.
Said one mid-western company official, "we’re looking to the banks involved to help us explain HSAs to our employees. We were not satisfied with many of the information packages provided.”
She like many other employers was offered a choice of custodians from the insurance provider and was forced to choose one to deposit monies as a means of helping employees fund the first year’s deductible.
More than 60% of employer respondents said they had or plan to provide monies to help fund the first year of their employees’ HSA account. The average contribution was 24% up from the 17% noted by ISI last year.
Insurance providers have embraced the concept of multiple bank offerings in association with their sign-up programs, a trend first noted in 2007 by ISI, this newsletter's parent.
The three most sought after elements in an HSA healthcare insurance plan were:
- Lower premium costs to employer, employee.
- Coverage of all procedures permitted by HSA regulations
- Education programs that clearly explained HSA rules, procedures
Also reflecting a trend first noted several years ago, 51% of employer respondents said they were increasing the amount of funding being provided by employees for healthcare benefits while 11% said they were requiring employees to contribute for the first time.
With the financial aspects of HSAs being more broadly understood by employers and employees, the role of banks and other financial institutions in the process is growing.
As a consequence, financial institutions providing HSA accounts were under greater scrutiny by individuals and employers.
While priorities may vary from each company and individual, there were attributes financial institutions should be providing to help small business. According to Sovereign Bank’s Anne Struthers, Senior Vice President/Director of HSAs, they are:
Quick Enrollment - enable companies and employees to quickly enroll online as, plan as they may, many companies wait until the last minute to offer their healthcare options
Education - provide companies with the tools required to ensure successful enrollment and work with clients to help create marketing and contribution strategies.
Quick Enrollment - enable companies and employees to quickly facilitate on-line enrollment process.
Flexibility - ability to work with all health insurance providers as well as insurance brokers/agents.
Service - In house service agents who understand the issues and are dedicated to quality service.
In a research study currently being completed by ISI, Sovereign Bank was judged as one of the most responsive in these four areas by more than 300 business leaders surveyed. To learn more about Sovereign’s HSA program for employers, click here.