How the HSA became a recruitment tool
It almost seems counterintuitive that a health savings account card, which is attached to a health plan that carries significantly higher deductibles than a traditional PPO plan, would be so attractive that it could actually be used as a marketing tool to recruit prospective employees and retain existing ones. However, that’s what’s happening and there is a good reason behind the trend.
When benefits account for almost 32% of the average employee’s total compensation (according to the Department of Labor), employers want to make sure that every dollar spent is effectively used to recruit and retain employees. Potential employees may not be wowed by their health plan, but they are interested in growing their retirement savings.
“An HSA is comparable to a medical 401(k),” said Sherry Olson, vice president of human resources of WEX Health, the health care unit of fleet card provider WEX.
WEX Health has noticed a shift in employers expanding their offering of HSA programs in the last few years to the point where now over half (56%) offer the benefit. In contrast, the popularity of flexible spending accounts, which operate on a “use it or lose it” funding model, have experienced a gradual decline of employers offering them according to the 2018 Employee Benefits Survey conducted by the Society for Human Resource Management. Nonetheless, FSAs still rank as the top choice with 63% of employers offering the benefit.
HSAs, like 401(k)s, are portable from employer to employer and the funds saved in the account don’t expire. The funds also earn interest as investments.
The rising popularity of Consumer-Directed Healthcare Plans has stemmed from their lower cost to both the employer and the employee. Because of this, many times the employer will take a portion of the savings to partially or fully fund the HSA card up to the IRS limit. Olson noted that when employers provide partial or full funding of an HSA, it acts as a major draw to the employee.
In a tight labor market, employers are looking to gain any competitive edge they can when it comes to attracting and retaining talent, no matter how small or how counter-intuitive it may appear. “This enhanced flexibility in consumer health care choice helps with recruiting,” Olson said.