According to a recent report from PwC's Health Research Institute, the 2017 medical cost trend is projected to be the same as the current year, growing at a rate of 6.5 percent.
Additionally, roughly half of employer health costs stem from hospital inpatient and outpatient services, however the small prescription drug share is increasing.
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Flexible spending accounts (FSAs) are great tools for employees to help curb the rising costs of out-of-pocket health care expenses, like prescriptions drugs or copays.
Not to mention, they're beneficial for employers to offer and promote, given that, the more employees that are enrolled in an FSA, the more money employers will save on payroll taxes each year. However, according to Aon Hewitt, adoption rates for FSAs are on a slow decline, with the average FSA contribution per participant coming to $1,342 in 2015, dropping from $1,405 in 2014. So — if they're that great, why the drop in contributions?
The answer is three-fold: lack of education, personalization and positioning for both employers and employees. In order for employers to promote FSA adoption within their organization, they too must understand the rich benefits that these benefit accounts will bring to both groups in the long run.
Here are three tips to help employers encourage and foster FSA adoption:
Mastering the art of explaining FSAs without glazing employees' eyes
First, avoid Friday afternoons when presenting anything — FSA related or not.
In all seriousness, the business of healthcare insurance is incredibly complex to the laymen, and it's equally as complex to employers and employees when new benefit or account options are introduced. For organizations or personnel new to FSAs, the simple idea can be daunting and will raise several questions that HR executives should be prepared to answer.
For companies pursuing an increase in FSA adoption, it's important to carefully review essential deadlines – including enrollment and end of year roll-overs. What's more, employers should outline the payment options and what is fiscally required of their employees.
Similar to shopping around for a new car or house, individuals will approach these accounts with care and consideration, and preparation will be essential in addressing their questions in an engaging manner, without losing their interest. And remember, no Fridays.
Drive adoption with personalization
As mentioned, most people aren't healthcare experts. Plain language and making personal connections is proven to resonate deeper with individuals and the same can be expected with FSAs.
For instance, many individuals need corrective eyewear, but not everyone dons glasses. While an FSA can be utilized in the purchase of new glasses or contacts, those are just one of several items that can be purchased with FSA dollars.
For an individual that doesn't have this expense, HR representatives should tailor their messaging accordingly (think Band-Aids for employees with kids).
By outlining what the benefit account entails and tailoring messaging to each individual, connecting the dots will become a more fluid process, with less hesitation on whether or not this is something that employees should adopt based on their individual healthcare needs.
Adjust FSA placement in open enrollment forms
Oftentimes, the lack in FSA adoption is directly influenced by its placement at the end of open enrollment forms. By the time employees reach them, they often have so many deductions being made that they are reluctant to add any more. In order to increase FSA adoption across an organization, HR executives need to move the benefit accounts up the food chain in the enrollment experience.
As employees elect their group medical, dental and vision during the sign-up process, employers should clearly communicate how FSAs will help to cover out-of-pocket costs for each plan option.
Carefully positioning the value of an FSA account throughout the enrollment process will further drive employee adoption.
What's more, the educational aspect associated with communicating the benefits of FSAs throughout the entire process will help employees understand that their employer is providing a tool to help them manage all out-of-pocket costs related to healthcare, and not just pushing another plan at them.
FSA adoption is not without its hurdles. However, by identifying obstacles and employing solutions to overcome them early on, the adoption process becomes something manageable and the focus instead is on the benefits it provides. It also eliminates unfounded hesitation when taking the leap into something new that, at first, comes with great hesitation.
By applying these three critical components to an FSA adoption strategy, both employers and their employees will reap the benefits of these valuable benefit accounts.
Not to mention, employees will feel more valued and understood, which will inherently strengthen their relationship with employers, and, what's more valuable than that?
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