Profiles of HSA Users

1. Profiles of HSA Users Roy Ramthun April 2014

2. Meet RoyMr. HSA

3. Topics: What will we cover? Common myths about HDHPs & HSAs Distinct profiles of HSA holders How to use HSA profiles to your advantage

4. 2014 2015 Breaking News! HSA Contribution Limits HDHP Minimum Deductible HDHP Out-of-Pocket Max NOTE: The IRS must publish the official numbers by June 1.

5. Common Myths

6. MYTH #1 HDHPs/HSAs are only good for healthy people”

7. HSAsAre Good for Sick People, Too! • Preventive care is exempt from the deductible • Disease management costs are not • Catastrophic limits provide real protection • Limits apply to all covered benefits, including Rx • Limits cannot exceed (for 2014): • $6,350 for singles • $12,700 for families • ACA adopted these limits for all plans for 2014

8. HSAvs. ACA Limits: 2015 $6,450 $6,600 $12,900 $13,200

9. MYTH #2 HDHPs/HSAs are only good for young people”

10. HDHP Enrollment Data Age distribution of people covered by HSA-qualified HDHPs, Individual Market, January 2013

11. MYTH #3 HDHPs/HSAs are only good for wealthy people”

12. HSA Tax Deduction Data • Average tax deduction/return = $3,051 • < $50,000 -- $2,075 • $50,000 - $100,000 -- $2,410 • > $100,000 -- $3,936 • Percent of Returns, by income group • < $50,000 – 23% • $50,000 - $100,000 – 30% • > $100,000 – 47% Source = IRS Statistics of Income Bulletin (Winter 2014), data from 2012 tax returns

13. HSA Enrollment Data • 15.5M Americans enrolled in HDHPs • 10.7M HSA accounts • $19.3B in assets in HSA accounts (only $2.3B invested) • $2,356 = average funded HSA account balance as of 12/13 Source = Devenir, data as of 12/31/13

14. Participant Profiles

15. HSA Account Holders Unengaged Sitting Tight Pass-Thru Spender Saver Maximizer Investor

16. Unengaged

17. Sitting Tight

18. Pass-Thru

19. Spender

20. Saver

21. Maximizer

22. Investor

23. One Administrator’s Profile

24. HSA Experience Matters

25. HSA Investments, Low but Growing

26. Employer Strategies

27. EMPLOYER STRATEGIESTo Help Sick & Low Paid Employees • HSA funding – amount & timing • HRA funding – post-deductible • Cafeteria plan benefits • FSAs, wellness programs, disease management programs, supplemental insurance • Support – education & communication

28. EMPLOYER STRATEGIES Don’t Undersell the HDHP • Most employees assume HDHPs offer inferior coverage • Premium savings • HSA funding can actually lead to a richer plan than before (i.e., higher actuarial value) • “Bronze” HDHP (AV = 62.0%) • AV with $500 contribution = 68.0% • AV with $1,000 contribution = 73.6% • AV with $2,000 contribution = 82.4%

29. EMPLOYER STRATEGIES To Help Young Employees Communicate the power of compound interest

30. EMPLOYER STRATEGIES Measure Engagement What data can help measure “engagement?” • How many employees never opened their HSA? • How many employees are not contributing any personal money to their HSA? • How many employees are spending every dollar contributed (i.e., minimal or zero balance)? • Are average balances  or  ? • Does changing the employer contribution amount or timing affect employee behavior?

31. EMPLOYER STRATEGIES Make Data Work for You • The more employers know about their employees, the more they can: • Improve employee well-being • Reduce costs • Generate positive experience • Meaningful, usable data can help employers: • Understand employee “engagement” • Drive or align plan strategies • If your HSA administrator cannot provide good data, it might be time to switch

32. EMPLOYER STRATEGIES Leverage Personalization

33. Employee Strategies

34. EMPLOYEE STRATEGIES How to Fund the HSA • Many people can contribute more than their out-of-pocket risk • Take advantage of employer matching contributions, if offered • Pay attention to employer incentives that may increase contributions • Don’t forget to factor in tax savings • Making contributions via payroll deduction is best • If uncertain how much to contribute, use the “look back” method • Ask questions – NEVER assume!

35. Questions?

36. Thank You!