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A summary of the articles included in the July 2024 edition:
- Checking the Pulse of the HSA Market with Devenir’s Eric Remjeske
- H.I.G. Capital Completes Acquisition of Health-E Commerce
- Participation in High-Deductible Health Plans is Highest Among Generation Z, a New Benefitfocus Report Finds
- Employer Tools to Maximize Retention of HSA Balances
- HSAs Have ‘Mixed Effects’ on Healthcare Service Usage
- Beware the Disqualifying HRA if You’re Funding an HSA
Checking the Pulse of the HSA Market with Devenir’s Eric Remjeske
To check in on the pulse of the HSA market, we talk with the co-founder and president of Devenir Research Eric Remjeske, who is also a co-author of the semi-annual Devenir HSA Marketplace Research Report, recognized as the industry standard for tracking health savings account market statistics and trends.
We’ll cover the key findings from the latest report while also talking about some market growth projections, thoughts on why more people aren’t using them as a savings tool, and 2025 HSA contribution limits.
H.I.G. Capital Completes Acquisition of Health-E Commerce
H.I.G. Capital is pleased to announce that one of its affiliates has completed the acquisition of Health-E Commerce, an e-commerce retailer of flexible spending account (FSA) and health savings account (HSA) eligible products and services. FSAs and HSAs are tax-advantaged accounts that allow employees to set aside pre-tax money to pay for eligible health expenses.
H.I.G. is partnering with the current management team to support the Company’s continued growth. Preston Farrington, Chief Executive Officer of Health-E Commerce, commented, “We are excited to enter this new chapter with H.I.G. as we continue to enhance Health-E Commerce’s breadth of product and telehealth service offerings to better serve our customers. H.I.G.’s consumer and healthcare experience, combined with its significant resources, position us to continue executing upon our growth strategy and vision for the Company.”
Participation in High-Deductible Health Plans is Highest Among Generation Z, a New Benefitfocus Report Finds
Benefitfocus announced the release of its “2024 State of Employee Benefits™ Report,” a detailed look at how employers support today’s workforce through workplace benefits and savings programs.
Across industry research, many findings show health care continues to be one of the most important employee benefits. The Benefitfocus report uncovered that for the 2024 plan year, employers continued to expand health insurance options for employees, with 84% of employers offering a combination of traditional health plans and HDHPs — giving workers across generations and circumstances more options to manage their health care and financial needs.
Notably, the report shows that participation in HDHPs in 2024 — often coupled with HSAs — is highest among Gen Z employees (45%), followed closely by millennials (43%) and Generation X (30%). This data suggests Gen Z’s relatively larger adoption of HDHPs may be a result of younger employees gravitating toward lower premiums (i.e., lower monthly costs of HDHPs) and potentially less financial burden.
Employer Tools to Maximize Retention of HSA Balances
Health Savings Accounts are designed to help us manage current and future qualified expenses by delivering tax benefits on every dollar contributed to and invested in our accounts. The more we retain in those accounts, the more money we have available to pay future medical bills. Thus, a reasonable goal is to maximize our account balances.
At the same time, medical coverage is designed to protect us when we experience an injury, illness, or condition that requires immediate or ongoing care. We don’t want to compromise our health by not seeking care just to see our Health Savings Account balance grow.
Is there a happy medium? Yes. Employers can offer some services and products that help employees reduce their net cost of care, thus preserving higher Health Savings Account balances without reducing care (and, in some cases, enhancing outcomes). And they may also reduce the cost of coverage (future premiums). Let’s look at these services and products to see how they help.
HSAs Have ‘Mixed Effects’ on Healthcare Service Usage
A recent report by the Employee Benefit Research Institute (EBRI) analyses how participants are utilizing their health savings accounts (HSAs), finding that the benefit could have mixed effects on healthcare services.
The “Fast Facts” analysis finds that HSA plans tended to have more inpatient admissions and days rather than preferred provider organizations (PPO). HSA participants were also likelier to file fewer prescriptions as compared to PPO enrollees.
According to EBRI, among individuals with no health conditions, HSA plans resulted in fewer emergency department visits relative to PPO enrollees, fewer specialist visits, and fewer prescription drug fills, while visits to primary care providers increased.
Beware the Disqualifying HRA if You’re Funding an HSA
Question: My company covers a portion of employees’ deductible expenses with a Health Reimbursement Arrangement. Does this HRA affect my eligibility to open and fund a Health Savings Account?
Answer: Yes. A Health Reimbursement Arrangement is an employer-funded notional reimbursement program that allows a company to reimburse on a pre-tax basis the qualified expenses that you and your covered dependents incur which are not reimbursed from other sources. In a typical design, an employer purchases medical coverage with a higher deductible, then integrates an HRA to help employees manage their higher out-of-pocket responsibility.
An HRA follows many of the same rules as a medical plan. Under Health Savings Account rules, an HRA is considered other medical coverage. It’s disqualifying unless the HRA design itself is HSA-qualified.
Employers who want to allow employees to become eligible to fund a Health Savings Account can integrate a Post-Deductible HRA with an HSA-qualified medical plan. Under this design, the combination of the medical plan and the HRA doesn’t begin to reimburse your expenses until you’ve incurred deductible expenses no less than the statutory minimum annual deductible for your contract tier ($1,650 and $3,300 for plans that start in 2025, up from $1,600 and $3,200 in 2024).