While offering health coverage and benefits for employees and dependents is a major business expense, lost productivity due to physical and emotional health problems can be far more costly for employers.
Lost productivity is classified in two ways: presenteeism and absenteeism. While absenteeism means that the employee is physically not at work, presenteeism is when an employee is physically at work but a physical or mental health condition negatively affects their work quality and quantity. Employers spend two to three dollars on medical-related productivity costs (presenteeism) for every dollar spent on pharmacy and health care costs.
Effects of Presenteeism
Presenteeism can have many negative effects on your workforce, including:
- Spending unneeded additional time on tasks
- Decreased quality of work
- Lack of initiative
- Infecting other employees, clients or customers with an illness
- Lowered ability to perform at a high level
- Decreased quantity of work completed
- Inability to be social with co-workers
- Lack of motivation
Common Causes of Health-Related Productivity Costs
- Back and neck pain (notoriously a very expensive and prevalent medical condition)
- Colds and the flu
- Sinus trouble
- Depression and/or anxiety
- Ongoing chronic conditions
Decreasing Health-related Productivity Costs
To reduce productivity costs in your workplace, consider the following:
- Address conditions that affect many individuals of your employee population in your wellness initiatives.
- Offer health fairs, screenings and health risk assessments to evaluate the needs of employees.
- Integrate your health benefit strategies with your health management and wellness initiatives.
- Design your benefits package to support the behaviors that you want to see at your organization.
- Partner with a health care company that takes an innovative approach to wellness and offers productivity, wellness and disease management resources. Your health care company could offer the following:
- 24/7 nurse line
- Wellness and health risk assessment tools
- Lifestyle management and chronic condition assistance
- Solutions that empower individual employees to take control of their health care
If you do not address your employees’ health care needs, your workplace is far more likely to experience the negative effects of both absenteeism and presenteeism. However, if you can commit time and funds to help your employees get and stay healthy, you will reduce medical and pharmacy costs and increase worker productivity.
For more information, contact Consociate Health concerning how to execute an effective wellness plan.
Otherwise known as an HSA, a health savings account can be funded with your tax-exempt dollars, by your employer, by a family member or by anyone else on your behalf. Dollars from the account can help pay for eligible medical expenses not covered by an insurance plan, including the deductible, coinsurance, and even health insurance premiums, in some cases.
Who is eligible for an HSA?
Anyone who is:
- Covered by a high deductible health plan (HDHP);
- Not covered under another medical plan that is not an HDHP;
- Not entitled to (eligible for AND enrolled in) Medicare benefits; or
- Not eligible to be claimed on another person’s tax return.
What is an HDHP?
A high deductible health plan is a plan with a minimum annual deductible and a maximum out-of-pocket limit as listed in the following table. These minimums and maximums are determined annually by the Internal Revenue Service (IRS) and are subject to change.
What are the steps in an HSA?
- Employee, employer, family member and/or someone else funds the employee’s HSA account.
- Employee seeks medical services.
- Medical services are paid by HDHP, subject to deductible and coinsurance.
- Employee may seek reimbursement from HSA account for amounts paid toward deductible and coinsurance.
- Deductible and out-of-pocket maximum fulfilled.
- Employee may be covered for all remaining eligible expenses.*
The HDHP can provide preventive care benefits without the required minimum deductible.
*Subject to plan design; check your HDHP Summary Plan Description.
When do I use my HSA?
After visiting a physician, facility or pharmacy, your medical claim will be submitted to your HDHP for payment. Your HSA dollars can be used to pay your out-of-pocket expenses (deductibles and coinsurance) billed by the physician, facility or pharmacy, or you can choose to save your HSA dollars for a future medical expense.
You may also be able to use an HSA debit card to access your HSA funds, if your HSA custodian or trustee allows it.
You may use your HSA for non-medical expenses. However, HSA amounts that are used for non-medical expenses are taxable as income to you and are generally subject to an additional 20% penalty.
What is a deductible?
It is a set dollar amount determined by your plan that you must pay out-of-pocket or from your HSA account before insurance coverage for medical expenses can begin.
How much can I contribute to an HSA?
The annual HSA contribution limits for 2021 are $3,600 for individual coverage and $7,200 for family coverage. For 2022, these limits will increase to $3,650 and $7,300, respectively. Individuals age 55 or older may be eligible to make a catch-up contribution of $1,000.
What is the difference between an HSA and Flexible Spending Account (FSA)?
An HSA can roll over unused funds from year to year and is portable if the employee leaves the company. An FSA cannot roll over unused funds from year to year and is not portable.
Can I contribute to both an HSA and an FSA in the same year?
General-purpose FSA coverage will make you ineligible for HSA contributions. However, certain types of FSA designs will not prevent your HSA eligibility. For example, if you are covered under a “limited FSA” (for example, an FSA that covers vision, dental and/or preventive care expenses on a first-dollar basis), you can be eligible for an HSA.
Also, you can be eligible for an HSA if you are covered under a “post-deductible FSA” (that is, an FSA that only pays or reimburses for preventive care or for medical expenses that are incurred after the minimum annual HDHP deductible has been met).
Please ask if a limited or post-deductible FSA is available to you.
What if I enroll in an HSA in the middle of the year?
Your HSA contributions are generally determined on a monthly basis. However, if you enroll in an HSA mid-year, you are allowed to make a full year’s contribution, provided you are eligible on Dec. 1 of that year and you remain eligible for HSA contributions for at least the 12-month period following that year.
Why should I elect an HSA?
- Triple tax benefits
- HSA contributions are excluded from federal income tax.
- Interest earnings are tax-deferred.
- Withdrawals for eligible expenses are exempt from federal income tax.
- Reduction in medical plan contribution
- Unused money is held in an interest-bearing savings or investment account.
Note: A few states have not passed legislation to provide favorable state tax treatment for HSAs. Therefore, amounts contributed to HSAs and interest earned on HSA accounts may be included on the employee’s W-2 for state income tax purposes.
Long-term Financial Benefits
- Save for future medical expenses.
- Funds roll over from year to year.
- Account is portable—you take it with you even if you leave the company.
- You control and manage your health care expenses.
- You choose when to use your HSA dollars to pay your health care expenses.
- You choose when to save your HSA dollars and pay health care expenses out-of-pocket.
- You decide whether to use your HSA dollars to pay for non-medical expenses and incur the additional taxes.
Open enrollment is something you probably only think about a few times a year. For employees, it might be even less often. That’s why it’s important to touch on benefits throughout the year—to ensure employees are making the most of them. Here are five steps for providing employees with thoughtful, year-round benefits engagement:
1. Have a goal in mind—Think about your main employee benefits objective for the year.
2. Keep topics relevant—Stick to your goal throughout the year when communicating.
3. Aim for brevity—Get straight to the point with your messaging.
4. Change up the medium—Consider videos, flyers, posters and articles to vary messaging.
5. Set up a communication calendar—Space communications out for the most impact.
Reach out to us for more tips on helping employees maximize their benefits.
Benefits Education for Young Employees
Employee benefits aren’t always simple. In fact, for many young employees, they’re downright confusing. Look at basic health insurance term knowledge, for example. Only 7% of individuals can define terms like premium, deductible and coinsurance, according to UnitedHealthcare. Here are five ways you can start informing young employees about their benefits right away:
1. Start with benefits 101—Start educating with benefits 101 initiatives, assuming employees have no base knowledge. Resources in this area cover insurance basics, such as common terms, group health coverage ins and outs, and enrollment period restrictions.
2. Explain what’s in it for them—At the core of any transactional conversation is the question of “What’s in it for me?” Employees, especially younger ones, will undoubtedly want to understand why it’s worth it to learn insurance basics.
3. Vary the messaging—Use several formats to help reinforce benefits literacy among employees and capture more attention. Examples include email announcements, PowerPoints, videos, mail-home flyers, posters and comprehensive packets.
4. Don’t stop educating—Benefits literacy isn’t something achieved overnight. Rather, it should begin immediately and continue year-round.
5. Be there for questions—Have a dedicated person on the HR team help answer benefits-related questions. This individual should be available to respond to emails as well as attend in-person or virtual meetings.
You have a responsibility to educate your employees about their benefits. Young employees can’t be expected to understand their benefits nor make wise health care choices if they don’t understand benefits basics. Reach out to us for sample employee education materials.
Investing in a health savings account (HSA) is a rapidly growing trend. An HSA is a tax-exempt savings account used to pay for qualified medical expenses of an individual, their spouse and dependents. If the funds are not used, the money will continue to grow over time. One of the most attractive features of the HSA is that these funds grow through the accrual of tax-free interest. Additionally, consider the following HSA basics:
- HSAs have federally mandated annual limits that apply to HSA contributions.
- HSAs are portable if you change jobs or medical coverage.
- People ages 55 to 64 can make additional contributions to accelerate their savings rate.
And since an HSA can be invested in the market just like a 401(k), with tax-free interest, the opportunity for long-term growth is exponential. Talk with a Consociate Health representative to learn more.