Using HSAs to encourage long-term savings: One company's success
To help spenders get the most value from the plans, it is important to focus on messages that demonstrate the nuts and bolts.
Earlier this year, we were delighted to share the spotlight with our client from Hitachi Vantara for a health savings account (HSA) campaign that created a 30 percent increase in the number of employees investing money in their HSAs.
Since then, we’ve fielded a lot of questions about how Hitachi Vantara was able to directly connect the HSA to long-term savings. This is a goal many organizations are trying to reach.
How do you get to the point where you can move 88 percent of people into an HSA-eligible plan and get a portion of them investing and saving for their futures? It takes time. It also requires focused, tailored and ongoing education.
We take ROI seriously, and our clients’ HSA success stories all share consistent themes:
- They listen to their employees—through focus groups, surveys, and other feedback mechanisms—to make sure they understand their needs and can tailor plan designs and communications accordingly.
- The plan designs are simple. They’re created so that it’s easy to compare the HSA plan to others. In addition, the plan designs generally favor the HSA/high-deductible health plan (HDHP)—making it easier for change-resistant individuals to justify that choice.
- The organization is not shy about the value of the HSA plan or plans. Many organizations still want to present health plan choices with a neutral point of view, but this does not inspire people to adopt new things. A clear, bold position about what’s best for employees is key.
- They use targeted and personalized messages. This makes it easy for individuals to understand how the plans can benefit them.
- They make sure that education doesn’t stop after enrollment. This is essential to making sure people have a positive experience once they start using their new plan. And it is the only way they will ever get to the point of being able to accumulate and invest HSA dollars.
Understanding your population
One size doesn’t fit all when it comes to HSA messaging. There’s a broad spectrum of ways people use these accounts, which is why it’s so important to understand the demographics of your population and their financial realities.
In every organization, you have lower-income earners who will have to use their HSAs like a flexible spending account—and will need that company contribution to their HSAs to meet their deductibles every year. And you have higher earners who may be maxing out their 401(k) contributions and looking for additional retirement savings vehicles.
We think of those two populations as “spenders” vs. “savers.” If your people are primarily lower- to middle-income earners who are trying to balance their budgets each week, then working toward accumulating large HSA balances isn’t realistic for them. (In fact, for some populations, an HDHP is going to create more financial instability and won’t be the right solution.)
However, even among highly paid populations, HSA education has often focused too much on the spending part of the account rather than the savings. This issue can be corrected with good education.
To help spenders get the most value from the plans, it is important to focus on messages that demonstrate the nuts and bolts of how the HSA works with the health plan. Here are sample topics that smart companies use:
- Ways to budget and save on out-of-pocket costs
- How company contributions work
- How to access your HSA funds
- Adding to premium savings via HSAs to save for a rainy day
- Ways to take advantage of preventive care and other free services to stay healthy
For the savers—the people who can afford to pay expenses directly and use their HSAs for long-term saving—your messages need to reinforce the value of the HSA as a savings vehicle. Because that’s where the value of the HSA really is. As a savings vehicle, the HSA can’t be beat. But much of the early education about the accounts entirely missed this point. Messages should educate these individuals about:
- Maintaining the triple-tax savings
- Using the HSA as an additional retirement savings vehicle
- Building the health care nest egg
- Maximizing catch-up contributions
These can be really compelling messages, and they can make the HSA and the switch to saving for the long term much more appealing—especially for people looking for additional tax savings. But it is a mental leap to say, “I’m going to spend potentially thousands of dollars each year out of my own pocket rather than touch this account to pay for medical care now.” I still often meet senior benefits leaders who don’t use that strategy themselves!
Hitachi Vantara’s HSA secrets to success
Over many years, Hitachi Vantara, a data storage provider and a subsidiary of Hitachi Ltd., has focused on helping its employees make the most of their HSAs. Yet few employees who were enrolled in the HSA-eligible medical plans were investing their HSA balances, even if their accounts held large enough balances to do so. At the core of the issue was that most employees were unaware that investing was even an option. In addition, investing was often perceived as confusing and difficult to do.
To address these issues, we helped Hitachi Vantara create a series of tip sheets to explain the powerful advantages of an HSA, including how people can invest their savings to cover future health care expenses. The campaign used friendly visuals and simple language to illustrate the benefits of investing. It educated them about the power of investing HSA dollars, such as paying no tax on interest earned from investments, low-fee investment options, furthering the growth potential of the funds, and the fact that any time they needed the money, it was there for them to access.
Hitachi Vantara reinforced this messaging with targeted emails:
- Account holders who didn’t have a high enough balance to invest their HSA dollars received targeted tips on how to save more.
- Account holders who had a high enough balance to invest, but weren’t investing, were sent messages that encouraged them to consider the savings potential they were missing and educated them on how easy it was to get started with investing.
The company continued to drive this message home by including it in other campaigns, such as Benefit-of-the-Month emails, and by highlighting the HSA’s tax advantages during annual enrollment.
Just one month after the campaign launch, Hitachi Vantara saw a 30 percent increase in the number of account holders investing their HSA dollars with one HSA provider. HSA education will keep coming in order to make sure employees maximize the advantages of their accounts. Delivering tailored, focused, and ongoing education can help people see the value in HSAs and inspire them to use this important and powerful tool to link health and wealth.
Jennifer Benz (jbenz@segalbenz.com) heads Segal Benz, a national leader in HR and employee benefits communications.
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