Turning a Health Savings Account into a Recruitment Tool

An HSA is a triple tax-advantaged savings vehicle designed to help people pay for their ongoing medical expenses.

Brilliant minds are running rampant all across California. Some of the brightest minds from around the world end up in the sunshine state because they see opportunity, making Silicon Valley home to some of the most innovative technology companies of the last 50 years. Many thought the area was doomed after the late 1990s tech bubble had burst but it is thriving yet again – even more so than before.

Talent seems to have followed the rise of these new innovative companies and with it, the fight to acquire and retain such talent has grown more and more competitive. Many of those talented people fit squarely into the millennial generation. Millennials tend to care more about happiness, passion, diversity, and sharing as opposed to justice, practicality, duty, and integrity. They are explorers and are increasingly owning their own financial futures.

Millennials also don’t stay at one job or one company for 30 years like previous generations once did. Their sense of loyalty has been trumped by other factors that they resonate with more. This presents a challenge for employers. Employers will need to find creative ways to attract and retain millennials for as long as possible to ensure that their efforts aren’t wasted. How can a Health Savings Account (HSA) make an impact on this problem? Let’s take a look.

Health Savings Accounts, Reimagined

An HSA is a triple tax-advantaged savings vehicle designed to help people pay for their ongoing medical expenses. Contributions are tax-deductible, balances grow tax-free through interest (and potential investment gains), and distributions are not taxed if used for qualified medical expenses.

HSAs are coupled with qualifying High Deductible Health Plans (HDHPs). More and more employers are looking to offer HDHPs with an HSA to help control rising healthcare costs. In talent constrained areas where the competition is stiff, many companies often revert to offering the “high-end” health plan (e.g., $0 deductible PPO and 100% premiums covered by the employer). This scenario is a “check the box” to offering the “best” health insurance. However, how do you know if an insurance plan is the “best” if it never gets used? It’s a fairly subjective answer and the reality is that it depends. Sure, with a $0 deductible plan and 100% of your premiums covered, you don’t have to worry about a medical expense from a financial standpoint. But what if you don’t go to the doctor or don’t seek medical care at all? Maybe you are fortunate like me and you only go to the doctor for your annual physical exam. So while you may not need to think about the financial cost of your care, the ability for you to save for when you actually need funds is taken away from you.

Employers work with insurance agents, brokers, and benefits consultants to help them understand the macro impact of their benefits decisions – from costs to employee satisfaction. All too often, Employers can’t make a decision about something they have no idea about. For that reason, we have a unique opportunity to help employers understand the value of an HSA from the employee perspective.

In California, consumer-driven health is not a new concept and High Deductible Health Plans were popular for a period of time, but I would argue for all of the wrong reasons. Those reasons include the (historical) wide premium difference that an HDHP vs. a traditional PPO/HMO had. It was largely touted as a cost savings offering for the Employer. While this is true, from the employee’s perspective, one of the biggest benefits of the HSA is their inherent ability to create a future nest egg.

In recent years, the California insurance market has seen the premium gap decrease leading to fewer employees having the HDHP option. But this shouldn’t result in taking the long-term savings benefits of an HSA away from employees.

The (Not So Obvious) Opportunity

What if you can turn an insurance product into a recruiting tool? Do you think you could gain more attention and more trust from your Employer client? Think about it for a moment. If a company has a large portion of their employee pool who are millennials and that portion, on average, rarely seek medical care (proactive or reactive), wouldn’t it make more sense to include an HDHP with an HSA? Rather than paying the premium for a product they would never use, pay the same or likely less to give the employee the option to begin saving for their eventual healthcare needs. Even if, from a cost perspective, your employer client breaks even, the employer has unlocked an employee benefit that was not available to their employee before: the HSA.

Most employers operating in “hot” markets compete for talent day in and day out. Those same employers often feel as though they have an obligation and responsibility to watch out for the long-term wellness of their employees. Rising healthcare costs are not a secret and frankly, it’s just getting worse. To put things in perspective: The average couple will spend $280,000 on out-of-pocket medical expenses by the time they retire and live through life expectancy. According to a 2017 study by the Federal Reserve, 44% of Americans couldn’t cover a $400 emergency expense out of their pocket.

When you take these two things together, the cynic would say there is no hope! However, the optimist would tell you that the future is bright. By helping employers think through the value of offering an HDHP with an HSA, it allows employees to begin chipping away at the savings needed to maintain their own health in retirement. When pensions began going away and the 401(k) market began to take off in the 1990s, employers stepped up to help employees through that transition. Isn’t it about time employers did the same for their employees’ healthcare costs?

Dare to be Different?

A little bit of creative thinking may yield some longer lasting and trustworthy relationships. Isn’t that the goal? Employers look for trusted relationships because they want to know that you have their long-term interests in mind. Bring them an idea worth talking about!

Shobin Uralil is the COO and Co-Founder of Lively, a modern Health Savings Account (HSA) platform for employers and individuals. Lively HSAs works alongside qualifying high deductible health plans to make managing healthcare costs easier for everyone. Lively is not a bank but has all of the benefits of one. Lively was started to help consumers optimize their healthcare spending, maximize their savings, and better their livelihood. Invest in your Health!

Prior to Lively, Shobin was the Vice President of Operations at Retroficiency, an energy analytics software company and co-founder and CEO of kWhOURS, Inc., an energy auditing software company. Shobin earned a BS in Business Administration from Georgetown University and an MBA from MIT’s Sloan School of Management, where he was the recipient of the inaugural Howard and Carol Anderson fellowship for entrepreneurship.

Lively is headquartered in San Francisco, CA. For more information visit Livelyme.com.