This article was contributed by:
Matthew Clarkin, Access Point HSA
For many years the general consensus of benefit consultants and employers has been that integration between health insurance and HSA providers was the paramount factor in selecting an HSA provider. Thus, many employers made the important choice of an HSA provider predominantly or in some instances solely on this one metric.
Certainly, the seamless communication between an HSA provider and a health insurance provider is a factor that an employer should give consideration and weigh when making their decision. The more simple and easier a transition to a HDHP/HSA model is made for the employee the more successful the transition is likely to be. But how heavily should integration be weighed by an employer, and is there actually a downside to coupling the HSA provider with a health insurance carrier?
First, what is integration? The most complete form of integration is a situation where the health insurance provider is coupled with an HSA provider it owns. The advantage to the employer during the open enrollment period is that employees only have to complete one set of paperwork and one user interface. The post-enrollment advantage achieved from this level of integration is that claims are seamlessly synched between the health insurance and HSA providers. In addition, claims adjudication, which enables payments to be paid automatically from an employee’s HSA, is an available option.
But while integration has advantages, there are also potential disadvantages for employer who is contracted with fully integrated health insurance and HSA providers. First, an employer should give careful consideration to whether it wants to offer claims adjudication as an option with its HSA program. An employee should consider – if financially possible – paying expenses out of pocket without utilizing his or her HSA funds in order to take full advantage of the triple tax free opportunity available with the HSA. Claims adjudication is a feature that can lead to employees to not making long-term, strategic choices concerning how they spend and invest their HSA dollars.
As health care is a major expenditure category, employers are likely to make changes to health care providers due to price increases or inadequate service. The integration of the HDHP and HSA providers makes such a change more complex. Therefore, employers should keep in mind that while integration is likely to make processes more simple and stream-lined in the short term, it might have the opposite effect in the future should the employer decide to change either provider.
As with most decisions concerning HDHP and HSAs, there is no one correct answer. This why our firm recommends that that employers carefully research the pros and cons of integration before selecting an HSA provider.
Matthew Clarkin
Access Point HSA
