Category:
Health Reimbursement Accounts (HRAs)

Most Consumers Are Enrolling in HSAs to Save for Their Future Healthcare Needs

Most Consumers Are Enrolling in HSAs to Save for Their Future Healthcare Needs

05/16/2018

 

When faced with high deductibles, more women with breast cancer are postponing getting the care they need, according to a recent New York Times article, which profiles a woman named Pam Leonard who put off going to get a lump in her breast looked at for weeks because she feared the cost of both her deductible and medical bills.

 

A study published earlier this year in the Journal of Clinical Oncology supports this, finding that women enrolled in high-deductible health plans (HDHPs) experience delays in diagnostic breast imaging, breast biopsy, early-stage breast cancer diagnosis and chemotherapy initiation (by an average of seven months). Dr. J. Frank Wharam, a Harvard researcher and one of the study’s authors, told the Times that unlike people with chronic illnesses like diabetes, women diagnosed with breast cancer are usually not prepared for the significant expenses associated with it.

 

Unexpected healthcare costs are a significant concern

WEX Health’s new Clear Insights report supports this; a quarter of our survey respondents said they forgo healthcare services all the time or often due to associated out-of-pocket expenses. It should also come as no surprise that nearly two-thirds of those surveyed are somewhat or very worried about unexpected out-of-pocket costs of current healthcare needs or illnesses, and of those people, nearly half are also worried about the cost of healthcare in retirement.

 

HDHP plan participants feel they make smarter health decisions

More than three-quarters (82 percent) of those who participate in HDHPs told us they either somewhat or strongly agree that managing their health savings account (HSA) helps them make smarter health decisions.

 

HSAs provide relief for some

The primary reason our survey respondents enrolled in an HSAs in addition to their HDHP was to save for future healthcare needs (36 percent) and to have an ability to save for out-of-pocket and/or unexpected medical costs (29 percent). If faced with an unexpected health cost of more than $1,000, a third of the respondents with HDHPs say they would use their HSA account.

 

Education is key: Employees need help figuring out how much money to set aside

Since our survey respondents said they could use help figuring out how much money to set aside for their healthcare expenses, our report also called employers to help their employees set and achieve their financial goals with financial planning and management tools. For example, employers can gauge their employees’ capacity to pay for out-of-pocket expenses at any given time by viewing their overall Health Financial Viability Index on the WEX Health Cloud Employer Portal. And using the HSA Healthcare Savings Goal and Tracker, employees can gain more control over their healthcare finances. The Investment Dashboard, which is available on the WEX Health Cloud Consumer Portal, also makes it easier for workers to track their HSA investments. And since some workers are new to HDHPs and the stress that can accompany unpredictable out-of-pocket expenses, employers may choose to provide a safety net by enabling HSA Advance functionality that allows employees to borrow against future HSA balances to cover unplanned expenses.

 

To learn more about our 2018 WEX Health Clear Insights report findings, register here for our upcoming 30-minute webinar on Tuesday, June 12, at 1 p.m. Central Time. We’ll be sharing calls to action based on the types of experiences and communications employees expect and prefer as they work to better manage their healthcare benefits and expenses.

What Is a QSEHRA?

What Is a QSEHRA?

02/13/2018

by Becky Kinder

 

We know, there are far too many acronyms in healthcare, but QSEHRA is an important one! And since it’s on the newer side, it’s led more than a few people straight to the Google search bar.

 

QSEHRA stands for “Qualified Small Employer Health Reimbursement Arrangement” (HR 5447). Also known as “a small business HRA,” it’s becoming a popular employee health coverage option that was established and signed into law in December 2016 as part of the 21st Century Cures Act.

 

QSEHRAs have effectively provided small business owners with smarter healthcare options with less overhead and more cost effectiveness. These plans are designed to assist employees with insurance premiums from a plan of their choosing, and in some cases, the HRA will also cover other medical expenses.

 

It’s a great option for small employers: employers set the amount that they can afford to provide employees (as long as it falls within the legal limits) and employees are reimbursed for the expenses the plan allows for.

 

Employers who offer QSHRAs must have fewer than 50 full-time employees and must not offer traditional employer-sponsored group health offerings (including dental or vision) to any of its employees.

 

With its Notice 2017-67, the IRS issued further guidance on QSEHRAs, including the rules and requirements for providing a QSEHRA, the tax consequences of the arrangement and the requirements for providing employees with written notice of the arrangement.

Public comments on the IRS’s guidance were accepted through Jan. 19. The notice also established that the deadline to submit initial notices for 2017 QSEHRAs and 2018 QSEHRA plans beginning Jan. 1, 2018, is Feb. 19, 2018.

 

To learn more about QSEHRAs and the QSEHRA-related guidance issued by the IRS, review our post here.


What Is a QSEHRA? by Becky Kinder

Becky Kinder

Product Manager, WEX Health

As a seasoned member of our Product Management team, Becky drives the definition and development of features for several different functional areas of the software, serving as the voice of our partners, employers, and consumers to our development teams. Specific areas of focus include notional accounts, debit card, admin operations, and the consumer and employer portals. Becky has over 15 years’ experience collaborating on the delivery of technology solutions for the IT and healthcare industries. Since joining the team in 2007, she has defined and launched hundreds of features on WEX Health Cloud platforms.

 

IRS Issues Guidance on Small Employer HRAs

IRS Issues Guidance on Small Employer HRAs

11/03/2017

by Chris Byrd

 

This week, the IRS released guidance (Notice 2017-67) addressing qualified small employer health reimbursement arrangements (QSEHRA).

In the form of 79 questions and answers, the IRS explains the rules and requirements for providing a QSEHRA under section 9831(d) of its code, the tax consequences of the arrangement and the requirements for providing written notice of the arrangement to employees. A qualified small employer HRA may be offered by employers that have fewer than 50 full-time employees and do not offer group health plans to any of their employees.

The proposed guidance attempts to respond in part to President Trump’s executive order of Oct. 12, which called for expanded availability and permitted use of HRAs. It should be noted, however, that the response is only in the context of QSEHRAs and does not address potential further expansion of HRAs. The primary purpose of the proposed guidance is to address many questions that have arisen since QSEHRAs were created last December.

The guidance is intended to be incorporated into proposed regulations to be issued by the IRS and Treasury Department. It provides for public comments on the guidance and the proposed regulations through Jan. 19, 2018.

Chris Byrd, WEX Health’s executive vice president of operations, says, “The IRS ruling is proposed and not final. It answers many, if not most, of the questions that the industry had asked it to. That’s good, as it eliminates some of the uncertainty about how these accounts are to be administered, which should help adoption of QSEHRAs. Much of what is outlined is helpful, but it’s not perfect, and I would expect we and other industry participants will provide input during the comment period.”

HRAs were created by the IRS in 2002 to allow employers to fund medical care expenses for their employees on a pre-tax basis. In December 2016, the 21st Century Cures Act additionally created QSEHRAs, amending the IRS code, Patient Protection and Affordable Care Act and other laws to exempt QSEHRAs from certain requirements that apply to group health plans.

To read the IRS’s notice in full, go here.

 


Chris Byrd

Executive Vice President, WEX Health Operations & Corporate Development Officer

Chris Byrd brings more than 25 years of experience in employee benefits and banking to his role at WEX Health. A founder of Evolution Benefits in 2000, Chris played a key role in designing the proprietary architecture for the company’s prepaid benefits card.

Chris oversees the daily execution of WEX Health’s business and leads the company’s operations and service delivery, corporate development, merger and acquisition activity, and legal, industry, and government relations efforts.

He began his career in commercial banking, and prior to 2000, he focused on finance, strategy, and business development for Value Health and two start-up healthcare companies. He joined WEX Health in July 2014.

Chris, who serves on numerous industry boards, is a frequent speaker on emerging trends in financial services and benefits and is active in industry and government relations. He earned a degree in economics from Brown University.  


IRS Makes Cost-of-Living Adjustments for HRAs and FSAs

IRS Makes Cost-of-Living Adjustments for HRAs and FSAs

10/26/2017

 

The IRS has announced tax year 2018 cost-of-living adjustments for inflation for more than 50 tax provisions, including increasingly contribution limits slightly for Qualified Small Employer HRAs and FSAs. HSA limits had been announced by the IRS back on May 4, 2017, as part of the  Revenue Procedure 2017-37, which included inflation-adjusted HSA contribution limits effective, along with minimum deductible and maximum out-of-pocket expenses for the high-deductible health plans (HDHPs) that HSAs must be coupled with. Continue reading

Tax Reform Is the Next Hot Ticket for Healthcare Regulation

Why Tax Reform Is the Next Hot Ticket for Healthcare Regulation

10/03/2017

In spite of the many headlines and healthcare bills that have centered on repealing or replacing the Affordable Care Act (ACA), the healthcare landscape in the United States today looks remarkably similar to the way it did when the ACA was passed seven years ago: The majority of Americans still receive insurance through their employers. Continue reading

Healthcare Benefits in 2017: What Employers Have to Say

It’s been a tumultuous few years for the healthcare benefits community, and as the Trump administration takes office, the changes are just beginning. To address this, the Healthcare Trends Institute recently completed a survey of benefits professionals from across the United States to learn more about the trends, preparations and expectations for the coming year.

Trends in Healthcare Benefits: 2017 Healthcare Benefits Benchmark Study

The 2017 Healthcare Benefits Benchmark Study was completed by over 250 human resources executives, benefit specialists and other benefit decision makers from organizations ranging in employee size from less than 50 to over 2,500. Below, we will share some of the key insights and what they mean for employer groups in 2017.

Among the notable considerations for employers heading into 2017:

Employers Buying into Healthcare Consumerism

Since the passing of the Affordable Care Act in 2010, employers have been encouraging their employees to take more control of their own healthcare decisions by offering a high-deductible health plan (HDHP).

The Move to HDHP

High deductible health plans are plans that have minimum deductibles of $1,300 for individuals and $2,600 for families. One of the main selling points of an HDHP is that it combats rapid increases to monthly premiums for employers and employees, as shown by the relatively flat Medical Cost Trend over the past 4 years. The increasing popularity of these plans grew as a result of rising healthcare costs and the passing of the ACA, and pose benefits for both employers and employees:

  • For employees, high deductible health plans were designed to help them to lower premiums, focus on preventive care, shop around for affordable care, use emergency rooms only for emergencies, and ultimately take more control of their healthcare decisions.
  • For employers, HDHPs helped to combat rising premiums while shielding them from the Cadillac Tax, which was initially set to begin in 2018.

With all of this in mind, 2016 marked a milestone for healthcare consumerism, with the amount of organizations offering HDHPs jumping from 28% four years ago to 39% in last year’s survey to 53% in this year’s survey.

Pairing HDHP with Consumer-Oriented Accounts (HSA, HRA, FSA)

With this rise in HDHPs came an increase in the number of employees being enrolled in a Health Savings Account, Healthcare Reimbursement Arrangement, or Flexible Spending Account, as this year’s survey found that 51.5% of respondents’ employees are enrolled in one or more of these plans/arrangements.

By offering one or more of these arrangements, employers are demonstrating that they are committed to helping employees afford out-of-pocket healthcare expenses if and when they arise, making people-first decisions rather than money-first ones.

Notably, however, the move to HDHP does require effective communication, as there is a great deal of misunderstanding among consumers about why these plans help them and how they can use them effectively. Learn more about common misunderstandings in 5 Benefits Problems Employees Face and how to address concerns in How to Talk About Healthcare Consumerism with Your Employees.

Focusing on the Advantages

Organizations are relying heavily on their benefits programs to recruit, retain, and engage employees. Even if many employers have moved away from the traditional forms of healthcare benefits that were prevalent in the industry decades ago, the benefits offerings of today still can represent a significant investment in happier, healthier, and more engaged employees. Additionally, a well-defined benefits strategy can play a major role in improving company reputation as a leader and one that cares about its employees. In BenefitsPro’s Analysis of our whitepaper:

Respondents were asked to rank on a scale of 1 to 10 how strongly they agree with the statement “the quality of a benefits package impacts the reputation of my company,” with 10 being “strongly agree.” Not surprisingly, given that such packages are looked upon as recruiting tools, 67 percent put the statement at 7 or higher, with nearly a quarter choosing “strongly agree.”

Learn More: Download the Entire 2017 Healthcare Benefits Trends Benchmark Study

The entire 2017 Healthcare Benefits Trends whitepaper takes a much deeper look into the trends to look out for in 2017, including plans and insights from other employer groups. The national survey went to over 250 human resources executives, benefit specialists and other benefit decision makers from organizations ranging in employee size from less than 50 to over 2,500. Click Here to Download.