New age of health consumerism highlights opportunity for future benefit tools

Much has been written about the rise of health care consumerism, which has been driven in large part by e-commerce, telehealth, and digital payments. This trend further accelerated in the last two years as COVID-19 (Coronavirus) led financially challenged Americans to aggressively comparison shop for health care.

Less discussed is the reality that many patients didn’t become discerning health care consumers willingly. Instead, they realized they needed to be more active in their own care as out-of-pocket health expenses for Americans continued to climb, now surpassing $400 billion annually.

Despite taking greater control of their health expenses, many are still struggling to figure out how to make the most of their benefits and health care dollars to not only meet their basic health needs, but also their overall health care goals. A sobering report out last year from the Federal Reserve Board found that 37% of Americans couldn’t afford an unplanned expense of $400. The same survey found that one in four Americans had declined medical care due to cost.

This form of health care disempowerment is detrimental to not only an individual, but their family, the community and even the company in which they work. After all, when members of your workforce forgo or delay medical services for financial reasons, it can lead to more costly care down the line.

How can employers support their workforce?

Employers have worked to help defray employee medical expenses by offering health savings accounts (HSAs) and flexible spending accounts (FSAs). Both have undeniable advantages for beneficiaries, but they also come with some limitations – most notably how to manage each kind of account for maximum return.

HSAs and FSAs can help employees set aside money – tax-free – to pay for health expenses. Federal regulations cap contributions at $3,600 for individuals with an HSA and $2,750 for individuals with an FSA, which can be significant amounts to address medical needs.

Of course, HSAs must be paired with a high deductible health plan, but the amount set aside can roll over year over year, ultimately creating a considerable nest egg. FSA dollars, by contrast, generally can’t be rolled over, so they must be used in the year in which they are set aside. Any money that is not used according to federal guidelines is automatically forfeited by the employee, which can lead people to make bulk purchases of FSA-approved supplies, such as first aid kits, supplements, sunscreen, and condoms, before the end of the year. While this works within the letter of the law, it doesn’t really meet the spirit of what it is designed to do, which is help people save for their health care expenses.

But therein lies the crux of the problem: These vehicles are really geared for predictable medical expenses. LASIK surgery, monthly prescriptions and acupuncture or chiropractic care are what these accounts are really designed to address. People who save them to be a rainy-day fund for medical emergencies run the risk of either never using the money and surrendering it, in the case of FSAs, or blowing past the amount that has been set aside, in the case of both HSAs and FSAs.

Current conditions demand another option

The result is that those who face family medical emergencies, require unanticipated and uncovered care, or suddenly need an expensive new medicine may not have funds to draw on. That’s why today’s patients need other innovative financing solutions, as well as tools to help them use them appropriately.

Traditionally, employees have been offered calculators to help them determine how much they might need to set aside in an HSA or FSA, but little has been done to help them manage other financing solutions or vehicles. And, because employees can only contribute to either an FSA or HSA during an enrollment year, calculators for each benefit have been designed only to address one or the other.

But given the increasingly complex world of health care benefits and funding options, we need to provide employees with more than a variety of calculators that are each only useful for one type of account. Instead, we need to work towards a single tool that provides them with the information needed to better manage either their HSA or FSA accounts, as well as other spending vehicles, including a variety of flexible spending options that are becoming increasingly popular. A tool that is designed to help them understand the amount of money they might need to set aside for not just the best circumstances, but the worst, as well. A tool that can help them put together a plan to take advantage of all their benefits to build a health care safety net for themselves and their families, and how to activate and optimize those benefits in the moment.

Ultimately, the future could see deeper technology and strategic integration that leverages data, insights and impact – creating authentic interactions that create meaningful impact for employees’ health care decision-making while highlighting the available financial benefit or approach that would be best suited for their moment of need. Part of health care consumerism is meeting consumers in the moment.

While there may not be a silver bullet answer today, we need to continue to generate valuable experiences further empowering our employees to take control of their health and their health care spending. And by doing so, we can help reduce health issues that lead to absenteeism, productivity losses and overall workplace stress.

Shannon Burke, SVP and General Manager of Health Systems, Synchrony.