Rising healthcare costs

Healthcare costs in the United States are a significant concern for employees and employers alike. According to a survey from the U.S. Bureau of Labor Statistics¹ (BLS), household health insurance costs rose from $1,831 in 2010 to $3,405 in 2018. That’s almost doubled. Employers have fared even worse, with healthcare costs increasing by 22.3 percent. As the Benefits Enrollment process begins, these costs are foremost in the minds of both groups.

In an earlier post², I wrote about how the coronavirus pandemic is changing that process in various ways. One of the biggest is that continued remote working makes in-person meetings with HR personnel and benefits providers or attending benefits information fairs impossible. Distributing printed information onsite is also out of the question.

Communication and transparency, always important, assume an even more critical role this year. You will need to find new ways to get out the information, ensuring employees have all the facts required to make informed decisions. This process is especially important if your offerings have changed.

New offerings

Perhaps your organization is including additional programs or dropping others. Letting your employees know how their options are different this year and why will keep people in the loop. If your business has been adversely affected by COVID-19, let them know, especially if that is a factor in determining the changes.

High deductible plans

One option companies may choose to include this year is high-deductible health plans (HDHP). According to the BLS survey¹, the availability of HDHP for private industry workers participating in medical care plans increased from 15% in 2010 to 45% in 2018. In 2018, deductible amounts ranged from $1,400 to $5,000, the median being $2,000.

While gaining popularity, HDHPs come with pros and cons: Lower premiums for employers and employees, but higher out of pocket expenditures for employees who need health care. Employees may decide to skip necessary care or preventative care to avoid that expense.

In 2021, to qualify as an HDHP, the deducible for a single person must be at least $1,400; for a family, $2,800 (no change from 2020). They are often higher. The maximum out-of-pocket amounts that a person with an HDHP could pay for 2021 is $7,000 for a self-only plan and $14,000 for a family plan (Change of +$100 and +$200 respectively)³.

Health Savings Plans (HSA)

Employers can help employees who have HDHPs meet their medical expenses by offering the option to open a Health Savings Account. This pre-tax savings account allows people with HDHPs to set aside money each pay cycle to use to meet a wide range of qualified medical expenses. Employers may also choose to contribute funds to their employees’ HSAs. At the end of the year, any unused savings remaining in the HSA roll over to the next year. Interest made on the funds in these accounts is also tax-free. There is a limit to yearly deposits into an HSA. For 2021 they are $3,600 for self-only HDHP and $7,200 for family HDHP (a change of +$50 and +$100, respectively)³.

Keeping track

Tacking employee benefits choices, payroll deductions, and employer matches is always a challenge. If you offer HDHPs and HSAs, we have a product that will streamline that process. It uses a simple, two-step process to accurately fund your employees’ HSA accounts and uses actual payroll data to ensure accuracy. It’s quick to set up – you’ll be up and running in a day – and easy to use.

If you use Sage HRMS or Sage 300 Payroll, visit our website to learn more about HSA Deduction Payments via ACH for Sage HRMS and Sage 300 Payroll. You can also fill out our Contact Sales form or give us a call at 888.421.2004.

We have other software that makes managing employee benefits easier. Visit our Benefits Management webpage.

Sources:

1. Employee Benefits Survey: High deductible health plans and health savings accounts (PDF)
2. Benefits Open Enrollment during COVID-19
3. IRS Revenue Procedure 2020-32