Health Savings Accounts on the Rise

The utilization of health savings accounts (HSAs) is rising, creating a win-win for employees, employers, and HRO benefits providers. Let’s take a look at the results of two recent studies to find out why.

Buck Consultants conducted a survey (http://bit.ly/uu10es), commissioned by its parent, ACS, A Xerox Company, which revealed that HSAs are not only saving employers and consumers money, but also helping employees (and retirees) make better decisions about their healthcare. Consumers of HSAs are putting aside more money for potential medical costs than they did before (69% of those enrolled in High Deductible Health Plans [HDHPs] contributed an average of $1,000 to their HSA accounts  for individual coverage, and $1,500 for family coverage). They are also engaging in healthier lifestyle choices and doing more research for preventative care. Employers report that the cost of providing an HSA-qualified plan is less than that of a standard Preferred Provider Organization (PPO) plan. You might be thinking, this is good for the employer, but what does the employee think? Well, 72% of account holders chose the HSA-qualified plan even though they had other plan options, and 82% said their selection was based on the ability to save tax-free money.

According to the results of a survey released by Mercer (http://bit.ly/vZiiFL), due to the rising cost of healthcare plans and cost per employee, employers are taking action to try and keep costs down, e.g. nearly a third with 500 or more employees offer consumer-driven health plans, i.e. HDHPs linked to HSAs or health reimbursement accounts, up from <25% in 2010. Because of the high deductible to the employee, they cost less than other plans, around 20% less per employee than a PPO.

Here are two examples of leading benefits administration vendors helping their clients:

• ACS, one of the first providers to implement an HSA in 2004, has 25,000 employer implementations and $1 billion in HSA assets
• In 2010, Fidelity increased its number of HSA clients by >50% while adding 22,000 new indiviudal HSA accounts.

Providers can help with further education. Focusing on employees, I myself did not understand HSAs at first. I’m in my fourth year of having an HSA combined with my HDHP. First, let me say that I’m not the HSA spokesperson and there are pros and cons to any plan that need to be evaluated on an individual basis. The upside for those not familiar – speaking for my HDHP consumer-driven health plan I opened an HSA with – is that there are no co-pays and no forms to fill out. Preventative care is free, e.g. annual physicals. So if you are healthy, there are no costs except your monthly premium. But if you do get sick and need to go to the doctor, you pay out of pocket until the annual deductible is met, then in-network pays a high percentage until you reach your annual yearly max—that just happens to be approximately the same as the annual max I can contribute to my HSA; and like an IRA, the amount you contribute is deductible on your income tax.

HRO providers that can help clients navigate through the intricacies of healthcare will be greatly valued!

Gary Bragar, HRO Research Director, NelsonHall

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The Rise of Smartphone Apps in Benefits Administration

Over the past year, HRO service providers have launched various smartphone apps. One of the first apps I became aware of was ADP’s RUN app for small business owners. It’s been interesting monitoring the progress of this app since its launch in October 2010. Within six months, it reached 100,000 users while only available for Apple devices. It has since been made available to the Android and RIM platforms, adding even more users.

Payroll seemed like an ideal place for HRO service providers to develop apps. ADP then took it one step further and launched the ADP Mobile Solutions app, which provides users with HR, payroll, and benefits information including retirement savings information such as current 401(k) allocations, distribution percentages, account balances, and rates of return.

Towers Watson also has an app, TWGlobal50. It provides HR and benefits professionals with various information including planned pay increases, changes in employee engagement levels, talent mobility interest rates, and changes in healthcare benefit costs.

Unlike payroll, apps within benefits administration can cover a broad range of topics such as Morneau Shepell’s My EAP app, which provides the following:

• Health and wellness articles (from its workhealthlife.com website)
• Access to confidential e-counseling
• LifeSpeak On Demand video clips on a range of personal and work-related topics.

Other apps available from benefits administration providers allow users to access more personalized data. For example, Buck Consultants’ Benefits Genie Lite and Benefits Genie apps enable users to track a wide variety of health and insurance information for themselves or other family members including:

• Allergy information
• Prescription medications
• Vaccinations
• Operations
• Family history
• Physician contact information
• Benefits co-payments and deductibles, etc.

Although not an app per se, Aon Hewitt is also enabling its client employees to access their personal health and retirement information from smartphones via secure websites, allowing users to make changes to their retirement plans and even enroll for benefits.

These more interactive personalized apps make it easy for employees to stay connected and engaged as more responsibility is being shifted on individuals to manage their own retirement savings and health. Also, with healthcare reform, we are likely to see apps expanding to new areas such as healthcare exchanges.

Mobile access from any device will quickly move from a differentiator to a requirement, including for HRO. The difficulty is the development time, costs, and security challenges for services that will not likely generate new revenues as much as protect revenues and support continued growth. Technology investment decisions will be critical in staying current and still managing needed margins.

Stay tuned.

Amy L. Gurchensky, Research Analyst, HRO, NelsonHall

 

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Going Mobile

In early November, my colleague Linda Merritt wrote a blog titled “Mobile Apps Are Ringing Up HRO.” It recognized ADP as one of the early entrants with its payroll app “RUN Powered by ADP” for small business owners, which was launched in October 2010 for the iPhone, iPad, and iPod touch with plans to release Android and RIM-compatible versions this year.  Well, it’s hard to believe it has been this long for those of us considered middle-aged, but 40 years ago, Pete Townshend of the rock band The Who wrote “Going Mobile.” The song was about taking a vacation by riding around in a car with no particular destination, something Pete liked to do.  I don’t think Pete was thinking about processing payroll while riding around in his car, but this week ADP issued a press release with some very impressive statistics noting that there are already 100,000 users for its RUN payroll app.

A comment by one user, Scott McKain, stated “with just a few clicks, we process payroll conveniently and securely… and since transitioning to the RUN Powered by ADP mobile platform, we can now process payroll securely over a mobile device, no matter where our busy schedules take us.” Hopefully, Scott is not processing payroll while driving around in his car on vacation.

The article also references a 2010 nationwide survey conducted by ADP Research Institute that found that small businesses are leading the trend toward increased mobility, with 90% of small business executives out of the office an average of 23% of the time per 40-hour work week.

Since ADP released its app, other providers have announced mobile offerings for HR services as well, which include:

• Raet’s iPhone and iPad app for gross and net payment calculations and accessing jobs and news from Raet (March 2011)
• Manpower’s mobile recruitment app for candidates and recruiters (February 2011)
• Wipro and McGraw-Hill’s partnership to develop “mConnect,” an open-standard mobile learning (m-learning) platform targeted at low-income, rural, and otherwise underserved students and workers in emerging markets (January 2011)
• Buck Consultants’ (subsidiary of ACS, a Xerox Company) two iPhone apps for health and insurance information: Benefits Genie Lite and Benefits Genie, which give individuals the ability to set future appointment reminders and track health and insurance information (November 2010).

Other providers to launch mobile apps include SourceRight Solutions, Kenexa, and The RightThing.

Out of the necessity to provide payroll services, I think we will continue to see increased mobile payroll for processing payslips, viewing payslips, and performing other associated functions such as direct deposit.  In general, mobile offerings for other HR service lines including benefits, recruitment, and learning will be more gradual to take off because they are not as time-sensitive as payroll.  I believe that mobile recruitment will take off but initially more so for hiring managers to approve job requisitions when out of the office and candidates to check on status of jobs they are submitting for.  M-learning will initially be for more self-paced learning to access content and as I stated last fall in my blog I do believe benefits mobile apps will be important for accessing benefits information, including doctors and other medical care providers for such instances when you are on vaction and an emergency arises or as Pete Townshend would say for when you are Going Mobile.

Gary Bragar, Lead HRO Analyst, NelsonHall

Health Care Reform – Who’s Got Your (HRO) Back?

There are HRO service providers that can do a wonderful job in a stable environment, efficient and effective. But who can do the job in an uncertain financial and regulatory environment? Which vendor partner/s has your back in times of change?

Today I watched as President Obama signed the historic health care reform bill. If you’re an employer, are you prepared for what the recently changed regulations will do to your business and how they will impact your employees? Are you comfortable that all of your employee and delivery systems are ready for compliance – across internal and, potentially, multiple third-party vendor systems?

As recently as February, Mercer found that seventy-one percent of U.S. employers have done nothing to prepare in advance. This is reasonable since no one was assured what new regulations, if any, would be passed. But prepared or not, some elements will go into effect in 2010, and every impacted employer and their HRO partners are going to need to scramble. 

At the end of the day, compliance is an employer’s responsibility, and wholesale benefit policy and plan reviews require big “C” consulting. However, an experienced HRO vendor partner with top-notch subject matter expertise can advise on changes that are required to keep your information and systems in compliance. And a primary multi-process provider can help work across the often myriad of systems, programs and interfaces that will need to be updated.

 I just took a quick scan of some of the HRO service provider websites. As you would expect, major benefits administration vendors like Hewitt, Mercer and Towers Watson have been long active on the topic; research, web info, bulletins, podcasts and webcasts. And today, Hewitt is hosting one of its bi-weekly healthcare reform webcasts, and Mercer is hosting one on the recent changes to mental health parity and addiction equity regulations.

ACS, via its consulting arm Buck Consulting, has prominent health care reform information available. ADP also has an easy to find section with weekly updates, and is already listing when some health care reform regulations are going into effect over the next few years. And Aon has a website area with weekly briefings and access to health care reform information.

If you are a current HRO client of benefits health and welfare administration, payroll, employee self services, or recruiting – who has kept you informed along the way? Who has called you today?

Linda Merritt, Research Director, HRO, NelsonHall