Benefits July 31, 2019

HSA Bill Could Expand Their Use for Retirement Savings

The bill would permit American workers enrolled in Medicare to open and contribute to a health savings account (HSA), without changing their coverage.

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A recent legislative bill and guidance from the Internal Revenue System (IRS) may expand the advantages of health savings accounts (HSAs), averting workers from utilizing dollars on preventive care medicine and instead on health care for retirement.

The Health Savings for Seniors Act, introduced in the U.S. House of Representatives this past month by Representative Ami Bera, D-California, and Representative Jason Smith, R-Missouri, would permit American workers enrolled in Medicare to open and contribute to an HSA, without changing their coverage.

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According to HealthEquity, Inc., which participated in drafting the legislation, the bill could save $1,800 for an average household led by someone age 65 or older, with a household income of $48,000. Additionally, the new piece of legislation could save more than $40,000 in income taxes over the course of a Medicare recipient’s retirement.

The introduction of the bill follows recent guidance issued by the IRS, which adds specific preventive care benefits for chronic conditions such as diabetes, asthma, depression and heart and liver disease provided by an HSA-compatible or high deductible health plan (HDHP). Rather than spending at least 25% of their HSA balance on prescription drugs, employees could pocket these dollars for health care retirement savings.

In prior guidance, the IRS did not classify services or benefits intended to treat existing illnesses, injuries or conditions as preventive care. This resulted in diagnosed employees failing to seek or utilize necessary medication and services that would aid a chronic condition, in order to avoid high costs associated with care. This inactive approach would then lead to health consequences requiring more expensive and extensive services, such as heart attacks, strokes, or amputations.

“What this regulation did was take a look at some of these health conditions, because if you don’t take certain medications, you may be adding more symptoms to chronic conditions. Some of these chronic conditions should be using preventative services,” says David Speier, managing director, Benefits Accounts, Willis Towers Watson.

Speier notes how the the regulation could encourage more plan sponsors to offer HSAs, as many were hesitant in the past due to their restrictions. Instead, employers would adopt health reimbursement arrangements (HRAs), which did not hold the same constraints.

“With an HRA, the employee cannot save for retirement,” he adds. “One of the big advantages is, if we can get more employers to adopt HSAs, then most can save for retirement instead.”

Adding to its savings advantages, HSAs are 100% tax-free and can stash dollars without taxation, advantages that may gain traction among plan sponsors and workers given the latest guidance. According to a 2018 Willis Towers Watson survey, 69% of employees chose not to enroll into an HSA because they didn’t see the benefit, understand HSAs or take the time to learn about them. Speier mentions how the IRS guidance and recent bill could shift this attitude towards the savings vehicle.

“Even basic concepts on HSAs aren’t necessarily understood by employees,” he says. “It’s giving them those tools and resources to understand that.”

Products July 30, 2019

Alegeus, Picwell Partner to Provide Health Benefit Decision Support

Picwell’s AI engine matches consumers to the right plan during enrollment by predicting future care considerations, estimating out-of-pocket expenses, and accounting for personal preferences.

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Alegeus, a provider of consumer-directed health care solutions, has partnered with Picwell, a next-generation decision support company, to enable Alegus clients to help consumers make smart benefit choices during open enrollment.

Alegeus’ clients can fully integrate Picwell’s artificial intelligence-driven and white-labeled technology into their existing enrollment experience via their benefit administration platform, or they can embed Picwell’s capabilities directly within their open enrollment communications and campaigns.

Alegeus notes that a recent poll about open enrollment experiences in 2019 found that 30% of employers did not help their employees with their benefit choices, and nearly half of consumers were dissatisfied with their benefit experience. Additionally, 25% were unsure whether they were enrolled in the right combination of health plan and accounts.

According to a survey released by Lively, 30% of adults say they completely understand their health benefits and 32% say they somewhat understand them. That means that 38% did not understand their health benefits at all.

Respondents to Lively’s survey reported confusion over high-deductible health plans (HDHP) and health reimbursement accounts (HRAs). The survey found that young people (ages 18 to 24) have far less understanding of preferred provider organizations (PPOs) (18%) and health maintenance organizations (HMOs) (19%).

“We match consumers to the right plan during enrollment by predicting future care considerations, estimating out-of-pocket expenses, and accounting for personal preferences,” says Matt Sydney, Picwell CEO. “We use an advanced data science methodology, that represents billions of medical claims for more than 40 million people, to evaluate the factors consumers care about and produce a holistic set of predictive outcomes.”

“Leveraging machine learning, creating dynamic models and applying artificial intelligence to big data sets will help employers and their employees make better choices while shaping the future of health care benefits,” says Steven Auerbach, chief executive officer of Alegeus. “As part of Smart Account Initiative, the Picwell technology will help our clients deliver an open enrollment experience that drives results and a seamless consumer experience.”

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