The increase in the adoption of high-deductible health plans continues. A recent report by Benefitfocus found that 65% of employers now offer HDHPs in addition to traditional health insurance plans. Tied to that increase is the growth in the adoption of health savings accounts by employees. HSA participation grew 60% since 2017, with 81% of eligible employees using these tax-favored accounts to pay for eligible medical expenses.
The benefits of an HSA to employees are three-fold. First, the accounts offer a triple tax benefit. If dollars are put into the account through payroll deduction, they are pre-tax, lowering the employee’s overall taxable income. If employees don’t use payroll deduction, there’s still a tax advantage, since their deposits are tax-deductible. All interest earned on the account is tax-free. And employees can make tax-free withdrawals for qualified medical expenses.
Second, unlike flexible spending accounts, the money that employees put into their HSA accounts does not need to be spent down each plan year, which can help employees save for future medical expenses. Having those savings on hand can be especially valuable when employees are diagnosed with health problems that require more expensive care, for example a cancer diagnosis, high risk pregnancy, or a condition that requires high-priced medications like hepatitis C.
The final benefit is that the employee owns the HSA. If employees leave their job, the account travels with them throughout their career and remains under their ownership in retirement. That can be helpful because as employees get older, their healthcare expenses will typically increase. The money in the account can lessen the impact of increasing healthcare expenses for retirees on a fixed income.
But even though more employees have HSAs, there’s a problem: Workers may not be using their pre-tax or tax-deductible dollars as wisely as they could be. The most common culprit is spending on inappropriate medical treatment or misdiagnosed illnesses. Researchers estimate that between $500 billion and nearly $1 trillion is wasted each year in the U.S. on unnecessary care.
That unnecessary care comes in a variety of forms:
· Duplicate diagnostic testing ordered because physicians don’t have access to a patient’s complete medical record
· Overtreatment for common conditions such as back and joint pain, some types of cancer, and stable heart disease
· Follow-up testing triggered by false positive diagnostic tests
· The inappropriate use of newer, more expensive medications and treatments instead of effective, less costly gold standard treatments
· Care delivered because a patient insisted on treatment that was not actually needed or appropriate, which can range from the prescription of antibiotics for illnesses not caused by bacteria to back surgery as the first treatment for chronic back pain
Not only may this unnecessary or inappropriate care waste HSA funds, it also negatively impacts employees’ health:
· One study found that nearly 12% of patients with stable cardiovascular disease undergo inappropriate angioplasty and stent placement. These unnecessary stents can put patients at risk for blood clots, post-operative bleeding from anti-clotting medications, and artery blockages caused by scarring.
· Researchers have found that patients with chronic back pain are prescribed narcotics and referred for surgery rather than receiving anti-inflammatory medications and physical therapy, the treatments most often supported by clinical research.
· Approximately 30% of common surgical procedures, including hysterectomies and heart bypass surgery, are provided for reasons not supported by clinical research and may be harmful to patients who undergo these procedures.
· One-third of knee replacements are performed in patients whose arthritis is not advanced enough to warrant surgery. In these cases, joint replacement often does not significantly reduce pain or increase function.
Tools to protect employee health and financial well-being
To help employees avoid both the health-related and financial costs associated with inappropriate care, employers can provide tools that support informed medical decision-making. These tools can include:
Second opinions. There are a variety of ways that employers can provide employees with access to second opinions on diagnoses and treatment recommendations. These opinions are especially important when an employee or family member is diagnosed with a serious, rare or complex health problem, receives a recommendation for elective surgery, or if the diagnosis is not clear. Second opinion programs are available through some insurance plans, as standalone services or included as part of an advisory or vendor management program, and through medical centers of excellence.
Objective, evidence-based research. Supplying employees with evidence-based information on treatment options, presented in plain English, can help them understand their options, make more informed decisions, and avoid inappropriate testing and treatment. It’s also helpful if this resource includes the option to speak with someone via phone or web chat who can answer questions about the information and suggest additional resources.
Referrals to experienced healthcare providers. Accurate diagnosis begins with connecting employees with the right physicians. The ability to connect employees with physicians who have proven experience and expertise in treating the condition that they’ve been diagnosed with can lower the risk of misdiagnosis and inappropriate treatment.
