HDHP/HSA + HR Department = Bad combo

[mrigney]

So my employer just announced that they will be offering a HDHP + HSA starting Jan. 1, 2016. We had an open enrollment meeting today (short election period that will go for the last 6 months of the year) where they discussed the HDHP + HSA. This is the second company that I've worked for that has begun to offer a HDHP. Am I the only one amazed at how little HR folks seem to know about HDHP/HSA? I'm pretty sure I knew more about them than our head HR lady (as did a few others in the room based on questions that got asked). We're talking basic things:

1. Didn't know how much premiums or deductibles were going to be (lack of prep more than anything...evidently details are still being ironed out.
2. Lack of understanding of an HSA - HR equated an HSA to an FSA that you can roll over year to year. Yeah, kind of. Except the HSA is triply tax advantaged, there is no time limit on when you have to make claims, etc.
3. Inability to answer questions about investment options. In fact, HR was unsure if you were even allowed to invest money that goes into the HSA. How the hell does that happen?
4. Employer premium differences - Our company pays 75% of our PPO premium. So, let's say premium is $1,000/month. Employer pays $750, employee pays $250. Question was asked, "What will happen to the $750 that the employer is currently paying?" Say the HDHP premium is $500. Is it still a 25/75 split? If so, the employer is only paying $375/month. Does that $375 go into my HSA? Do I in essence just lose $375/month as a benefit? HR said, "Hmm, that's a good question. We hadn't really talked about that."

How do you not know these things as an HR person? It seems to me that employers want to offer HDHP/HSA b/c there is some demand. But then they half ass it where it isn't advantageous for people...and in doing so, they discourage people from signing up. Result? Enrollment is low, employer says, "Gee, I guess people didn't want an HDHP, we're getting rid of it."

Anyone have similar experiences? Anyone have different experiences?

[RangerOne]

There is so much you can do with an HSA that it almost requires a discussion unto itself entirely separate from the HDHP.

Really it would almost be best for companies to pay a rep from the financial institution carrying the HSA come to the office a really explain all the possibilities.

Granted its HR's job to figure this stuff out and explain it well, but unless that person has a strong financial background I wouldn't expect most to do a good job.

But yeah, obviously you can't pick a plan without knowing the policy details; coinsurance, deductible, max-out of pocket and monthly premiums.

Maybe a follow up meeting with have plan details so people can weigh the pros and cons. I find it surprising the details most employees don't know about their 401k's, health plans and what the possibilities are of each.

[votu]

My company has also started offering HDHP+HSA, however, my HR department knows their stuff.  All the necessary information were communicated even though the HDHP coverage package is not yet available.  They even offer LPFSA with it too. 

[firewalker]

Our company announced it via an email and a few not so informational "informationals" that were actually sales pitches to convince you that this new (lack of an) option was done as a favor to the employees. No meeting, no question hotline, no nothing.

[clarkm04]

My wife's work has a HDHP.  They actually have three plans.  The HDHP, a PPO-1 and PPO-2.

The documentation we receive for open enrollment is very clear and the one time we had a meeting with an HR person regarding me jumping over if we have children went very well with the HR person being able to answer all my questions. 

Sounds like the company is flying by the seat of their pants or HR is incompetent or just not prepared for this meeting.

Best of luck getting better inform on this important issue.

[kendallf]

I am a federal civilian employee.  During our open season, they usually have a "health care fair" which, sadly, does not feature clowns and Ferris wheels but instead, has reps from the various insurance programs to answer your questions, provide brochures to the internet challenged, that sort of thing.

I was contemplating switching to Mail Handler's HDHP option and went to talk to their rep.  This woman did not know that they offered an HSA, and did not know the difference between an HSA and an FSA.  I opened her brochure and showed her that page.. politely.. then left. 

Fortunately most of the big companies have fairly comprehensive websites, and at least for our plans, they require a standardized summary that is easily compared.  The devil is in the details, of course.

[jorjor]

As someone who has consulted to large employers before on the topic (including consulting to companies implementing HSAs a couple of times), some of those things are somewhat explainable. I was the actuarial consultant in these instances, not in HR, so my comments will be from that point of view.

They probably don't know the premiums yet. It was rare for premiums to be set this early for a January 1 renewal. They might have an initial renewal (if the company actually purchases insurance) or an inital projection of costs (if they instead only purchase administration but in reality self-insure claims, which is more common for large employers), but rates usually weren't finalized until mid-to-late summer. Plan design details may not even be set yet either.

So why are they telling you now? HDHPs and HSAs are confusing to a lot of people. Telling employees right before open enrollment makes them freak the eff out. In addition, some people think "oh noes, they're going to take away my benefits" so they go out and get a bunch of services they don't really need (even if they aren't actually forced to go into the HDHP). Communicating it early, even if the information is incomplete, lets employees digest the information and lowers the plan cost overall.

I would be surprised if all of the employer-paid premium difference is given to you as an HSA seed. Part of the value proposition is that the company saves money overall on those that enroll. They might be looking to save by auto-enrolling people into the HDHP. They might be easing it in and fully getting rid of non-HDHP options eventually.

HR not knowing investment options and not knowing how the HSA works is definitely frustrating. Actually, most of it is frustrating from the employee's point of view if the information is incomplete.

[jorjor]

Though I guess re-reading the post I need to clarify. The HDHP is effective January 1, but there is open enrollment for the 6 month period from 7/1 - 12/31, during which HDHP isn't an option?

If not and you can start enrolling in the HDHP during the 6 month period, ignore everything in my post above.

[smalllife]

Short answer: in small businesses HR is (usually - they are the bulk of our clients) where they put the people who don't know how to think and can take care of the easy stuff so the owners and managers get work done. Get over a hundred employees and you have specialists, who have more of a brain but fact finding still isn't high up the hiring list - they need to know how to set up open enrollment and reconcile the bill with payroll, not so much the ins and outs of insurance.

[mrigney]

Lots of good replies here. Maybe I should clarify some things b/c people have had valid points.

@jorjor - First, you're an actuary? That's awesome. If I had known actuarial science existed when I went to school, good chance I would've went that route. Not knowing premiums...I understand that...not mad about that or even really frustrated with that part of it (other than the fact that the email about the meeting implied that they would have those numbers). I understand it's a little early for the premiums. Also , I understand the motivation from the employer's standpoint to save money on the HDHP. And if the numbers work for me, I'll go with the HDHP even if they keep all of the extra savings. From an employee's standpoint, when I came on with the company my compensation package included $65k salary + $10k insurance benefit (the amount they pay for my insurance. So total comp is $75k, right? If I take the HDHP, it becomes $65k + $5k (or whatever that number becomes). So yeah, it saves the employer money, but it is also basically a cut in compensation for me. I'll hold out hope that they bridge the gap somehow.

As for the charges of HR incompetence, that's what was most frustrating...normally, our HR (mid-sized company, about 1k people, a local engineering firm started from scratch 40 years ago) is super competent...maybe it's partly b/c I know a lot more than the average person about HDHP/HSA (as do most on this board I suspect) and so I have higher standards. Will just have to wait it out and see what happens. Probably going to email HR w/some questions, but not much I can do other than that.

Thanks for letting me vent:-)

[Louisville]

Short answer: in small businesses HR is (usually - they are the bulk of our clients) where they put the people who don't know how to think and can take care of the easy stuff so the owners and managers get work done. Get over a hundred employees and you have specialists, who have more of a brain but fact finding still isn't high up the hiring list - they need to know how to set up open enrollment and reconcile the bill with payroll, not so much the ins and outs of insurance.

Wow, I thought I was the only one that had noticed this. While I hate to tar all HR people with the same brush, it has been my experience that, generally speaking, they're not the sharpest tools in the shed.

[jorjor]

@jorjor - First, you're an actuary? That's awesome. If I had known actuarial science existed when I went to school, good chance I would've went that route. Not knowing premiums...I understand that...not mad about that or even really frustrated with that part of it (other than the fact that the email about the meeting implied that they would have those numbers). I understand it's a little early for the premiums. Also , I understand the motivation from the employer's standpoint to save money on the HDHP. And if the numbers work for me, I'll go with the HDHP even if they keep all of the extra savings. From an employee's standpoint, when I came on with the company my compensation package included $65k salary + $10k insurance benefit (the amount they pay for my insurance. So total comp is $75k, right? If I take the HDHP, it becomes $65k + $5k (or whatever that number becomes). So yeah, it saves the employer money, but it is also basically a cut in compensation for me. I'll hold out hope that they bridge the gap somehow.

As for the charges of HR incompetence, that's what was most frustrating...normally, our HR (mid-sized company, about 1k people, a local engineering firm started from scratch 40 years ago) is super competent...maybe it's partly b/c I know a lot more than the average person about HDHP/HSA (as do most on this board I suspect) and so I have higher standards. Will just have to wait it out and see what happens. Probably going to email HR w/some questions, but not much I can do other than that.

Thanks for letting me vent:-)

Yep, I'm an actuary. I haven't worked exclusively with large employer groups as clients since I left that job a couple years ago (though a few do come up every now and then in my new job). As our last requirement before we're fully credentialed, we have to write a paper and then give a short presentation about decision and communications related to an actuarial topic. Mine was about the considerations related to implementing an HDHP + HSA in an employer group.

I totally get the compensation issue. Though, I suppose you're only getting the benefit if you're using the benefit. It's possible that you could save money and be better off and get "more benefit" in the HSA if you project that your claims won't actually hit the higher deductible. For example, through some lower premiums and an HSA employer contribution, I'm better off in the HSA plan at my company. It's also possible that the HSA is going to cost them more money based on who elects to take each plan. I think they're more likely to "make you whole" if they're removing all other options and requiring people to go into the HSA. Different companies have different motivators for making the transition.

I'm totally not an HR apologist. I get the frustration there. I think you're doing the right thing by bringing up these things to HR. Let them know what you want and how their decisions impact you. It's better to bring these questions up now, and it's part of the reason the communication happened so early.

[coppertop]

I work for a firm with about 55 employees and I got the HR function by default.  We use an insurance broker, whom I am not allowed to change, and he is responsible for explaining our plans to the employees.  He does a terrible job, sad to say.  We offered an HSA/HD plan for the first time this year, and a few of us are trying it.  We have our money in a checking account because no one has explained to us any other options or even told us there were other options.  Our open enrollment is just before Christmas, and new plans take effect January 1.  Plans and premiums were not made available to us until nearly December.  The broker blamed the insurance companies. 

[waffle]

Short answer: in small businesses HR is (usually - they are the bulk of our clients) where they put the people who don't know how to think and can take care of the easy stuff so the owners and managers get work done. Get over a hundred employees and you have specialists, who have more of a brain but fact finding still isn't high up the hiring list - they need to know how to set up open enrollment and reconcile the bill with payroll, not so much the ins and outs of insurance.

Wow, I thought I was the only one that had noticed this. While I hate to tar all HR people with the same brush, it has been my experience that, generally speaking, they're not the sharpest tools in the shed.

I have a masters degree in HR and a bachelors in business management/finance. As someone who works in HR I mostly agree with you. Most HR people in smaller companies are pushed into it by default and wear several hats so the HR portion gets minimal attention. In larger companies there is so much bureaucracy to deal with that even good HR gets bogged down.
There are three areas where your daily work can fall into, value added, required non value added, and waste. Most professions focus on value added and try to eliminate waste while keeping the required non value added to a minimum. In HR we have to deal with a ton of the required non value added stuff simply to stay in compliance with all the (mostly ridiculous) laws out there. Because that is such a large part of the job HR people tend to fall into the pit of thinking that is the value that they add to the company and devote their time to trying to optimize those areas which generally creates more waste and a lot of annoyed employees.
All that is very frustrating to me in HR because HR should be one of the most strategic and important parts of a company. Correctly developed human capital is a huge strategic advantage but so little thought and energy is put into developing it that its tragic. The efforts that are made are usually the annoying feel good junk that has given HR a bad name.

End of rant. Sorry for going off topic a bit there.

[Emilyngh]

It's very funny that this thread is up today, because just yesterday I attended a meeting at work where HR presented an overview of a HDHP/HSA that they're considering.   And in my case too, I got the distinct impression that I knew more about the potential plan than those presenting.   While I found it a little annoying as well, the reality is that not everyone is as nerdy about this kind of stuff as I am :)

[ZiziPB]

 Also , I understand the motivation from the employer's standpoint to save money on the HDHP. And if the numbers work for me, I'll go with the HDHP even if they keep all of the extra savings. From an employee's standpoint, when I came on with the company my compensation package included $65k salary + $10k insurance benefit (the amount they pay for my insurance. So total comp is $75k, right? If I take the HDHP, it becomes $65k + $5k (or whatever that number becomes). So yeah, it saves the employer money, but it is also basically a cut in compensation for me. I'll hold out hope that they bridge the gap somehow.

The only reason companies are switching to HDHP's is to save on cost to the company.  So don't hold your breath - you are not likely to benefit from these savings in any way. 

However, you and everyone else should push as hard as you can for the company to make some type of a contribution to the HSAs for every employee (and to make it in one chunk at the beginning of the year).  Going from a regular plan to HDHP is a big change and a shock to the system for a lot of people, and most people are not prepared financially in case they have a large medical expense at the beginning of the year before they accumulate money in their HSAs.  Anyone living paycheck to paycheck will be totally unprepared if they need any type of medical treatment in January 2016.

My company has been offering an HDHP option for a while but last year they've decided to make it the preferred option (by making the PPO option super expensive).  To facilitate the switch, they seeded everyone's HSA account at the beginning of the year by making the employer's HSA annual contribution in one chunk on the first payday in January.  Even with that, a lot of people are complaining that they cannot afford to get the treatment they need. 

[waffle]

HDHP+HSA is a great option if you are a generally healthy family. Especially if your employer contributes to your HSA. at my company we have a PPO option and an HDHP+HSA option. Both have pretty low premiums, but the HDHP has $500 less premiums and the company contributes $1,000 to the HSA yearly. It works out so that in pretty much every situation the HDHP saves me $500 over the PPO. Their value varies a lot depending on company though.

[Indexer]

I've had an HSA at my last 2 jobs.  Both of them the HR team did a horrible job explaining them.

Really really sad considering one of the firms offered HSAs... like, to the public.....

In addition given the lower price of the HSA($30/month), given the $ the company would put in the HSA for you($300-800), and given the low deductible($1500).... the HSA was a better option basically all of the time.  I did the math trying to find the break even point.  Even if you spent $10,000 in hospital bills the HSA would be about equal in costs to the expensive option for the year.  If you only spent $100 the HSA was a clear winner.  The money the employer put in the HSA covered 80% of the premiums so it really cost almost nothing, and they had a deal where if you were healthy(on site physical) they would add in another $500.  My reimbursements into the HSA were more than the cost of the thing... I got paid to have insurance.  HR even had this guide booklet that showed what would happen if you spent various amounts of money comparing the HSA to the PPO.  HSA won even in the insanely expensive situation(just like when I did the math myself). 

I also tried to explain triple tax exempt to my colleagues.  Nearly all of them did the PPO anyway.... couldn't imagine having a big bill and were willing to pay an extra $100/month just in case they had a $1500 emergency(the deductible for the HDHP was $1500).

Did I mention we sold HSAs?   

New company is even better, HSA cost about the same, but the employer contributions can exceed $1000 and the investment options are much better.  I've convinced 2 people they should do HSAs.  Both max them out after getting the match in their 401ks.  Most everyone else... still doing the expensive PPO.

[money beard]

I would like to see a requirement that employers offer a HDHP option if the affordable care act ever gets reformed.  I'd love to have this option, but neither my work nor my wife's work offers one.

[mbl]

My employer has been offereing HDHP/HSAs for about 6 years now.
They have always covered what has amounted to about 98% of the premium.
They began by contributing $2300 to the HSA for a family the  first year and gradually lowered that until this year they contributed $0 but continue to cover 99%  of the premium.

I like the HDHP/HSA program because I know what my max OOP will be for the year.  In our case it is $5200/family.
we've been able to save quite a bit over the years.
I like the idea that for the most part,  instead of paying premiums, and perhaps not needing(if only) to use your med insurance, you get to save/invest money set aside in the HSA.    In our situation because the employer pays almost all of the premium,  for every dollar we spend, we actually get some service/care.   If we don't need it, the money remains ours in the HSA.

This isn't even taking into account the fabulous tax advantage of the HSA.