Profiles of HSA Users

Roy Ramthun

April 2014

Meet RoyMr. HSA

1. Common myths about HDHPs & HSAs

2. Distinct profiles of HSA holders

3. How to use HSA profiles to your

advantage

Topics: What will we cover?

Breaking News!

Single Family Catch-Up

$3,300

$6,550

$1,000

$3,350

$6,650

$1,000

Single

Family

$1,250

$2,500

$1,300

$2,600

Single

Family

$6,350

$12,700

$6,450

$12,900

HSA Contribution Limits HDHP Minimum Deductible

HDHP Out-of-Pocket Max

NOTE: The IRS must publish the official numbers by June 1.

20142015

Common Myths

“HDHPs/HSAs are only good for healthy people”

MYTH #1

HSAs Are Good for Sick People, Too!

o Preventive care is exempt from the deductible• Disease management costs are not

o Catastrophic limits provide real protection• Limits apply to all covered benefits, including Rx• Limits cannot exceed (for 2014):

• $6,350 for singles• $12,700 for families• ACA adopted these limits for all plans for 2014

HSA vs. ACA Limits: 2015

Family

Single$6,450

$6,600

$12,900

$13,200

“HDHPs/HSAs are only good for young people”

MYTH #2

HDHP Enrollment Data

0-1927%

20-2912%

30-3913%

40-4918%

50-5921%

60+10%

Age distribution of people covered by HSA-qualified HDHPs, Individual Market, January 2013

“HDHPs/HSAs are only good for wealthy people”

MYTH #3

HSA Tax Deduction Data

o Average tax deduction/return = $3,051• < $50,000 -- $2,075• $50,000 - $100,000 -- $2,410• > $100,000 -- $3,936

o Percent of Returns, by income group• < $50,000 – 23%• $50,000 - $100,000 – 30%• > $100,000 – 47%

Source = IRS Statistics of Income Bulletin (Winter 2014), data from 2012 tax returns

HSA Enrollment Datao 15.5M Americans enrolled in HDHPs

o 10.7M HSA accounts

o $19.3B in assets in HSA accounts (only $2.3B invested)

o $2,356 = average funded HSA account balance as of 12/13

Source = Devenir, data as of 12/31/13

Participant Profiles

HSA Account Holders

Unengaged Sitting Tight Pass-Thru Spender

Saver Maximizer Investor

Unengaged

Sitting Tight

Pass-Thru

Spender

Saver

Maximizer

Investor

One Administrator’s Profile

HSA Experience Matters

HSA Investments, Low but Growing

Employer Strategies

EMPLOYER STRATEGIES To Help Sick & Low Paid Employees

o HSA funding – amount & timing

o HRA funding – post-deductible

o Cafeteria plan benefits• FSAs, wellness programs, disease management

programs, supplemental insurance

o Support – education & communication

EMPLOYER STRATEGIES Don’t Undersell the HDHP

o Most employees assume HDHPs offer inferior coverage• Premium savings

o HSA funding can actually lead to a richer plan than before (i.e., higher actuarial value)• “Bronze” HDHP (AV = 62.0%)

AV with $500 contribution = 68.0% AV with $1,000 contribution = 73.6% AV with $2,000 contribution = 82.4%

EMPLOYER STRATEGIES To Help Young Employees

Communicate the power of compound interest

EMPLOYER STRATEGIES Measure Engagement

What data can help measure “engagement?”• How many employees never opened their HSA?• How many employees are not contributing any

personal money to their HSA?• How many employees are spending every dollar

contributed (i.e., minimal or zero balance)?• Are average balances or ?• Does changing the employer contribution amount or

timing affect employee behavior?

EMPLOYER STRATEGIES Make Data Work for You

o The more employers know about their employees, the more they can:• Improve employee well-being• Reduce costs• Generate positive experience

o Meaningful, usable data can help employers:• Understand employee “engagement”• Drive or align plan strategies

o If your HSA administrator cannot provide good data, it might be time to switch

EMPLOYER STRATEGIES Leverage Personalization

Employee Strategies

EMPLOYEE STRATEGIES How to Fund the HSA

o Many people can contribute more than their out-of-pocket risk

o Take advantage of employer matching contributions, if offered

o Pay attention to employer incentives that may increase contributions

o Don’t forget to factor in tax savings• Making contributions via payroll deduction is best

o If uncertain how much to contribute, use the “look back” method

o Ask questions – NEVER assume!

Questions?

Thank You!