Question

A HEALTH SAVINGS ACCOUNT AT FRONTLINE PR

Susan Berry just returned from a national conference on compensation and benefits where she attended a session on Health Savings Accounts (HSAs). Susan is the Human Resources Director at Frontline PR and the company has been struggling with the cost of health care insurance. After speaking with several experts at the conference, Susan now thinks an HSA might be a viable option for the company.

Frontline PR is a public relations firm located in the Northeast that employs close to 150 people in four different offices. Public relations professionals make up most of the staff, but the company also employ a complete administrative and operations staff. All of Frontline's employees work full-time schedules and are eligible to participate in its health care insurance plan. Frontline currently offers a standard fee-for-services health care insurance option. The plan has a modest deductible of $300 per year and a 20 percent coinsurance requirement. In addition, the company offers a Flexible Spending Account (FSA) that allows employees to set aside pretax earnings to pay for the deductible, coinsurance, and other medical expenses.

Susan is considering offering an HSA along with a high-deductible health insurance plan instead of the current insurance plan and FSA. At the conference, Susan learned that making such a change could result in significant cost savings for a company. The high-deductible health insurance plan would cost a lot less for the company than the standard fee-for-services plan that Frontline currently offers. While Susan suggests that Frontline make contributions to each employee's HSA, the overall costs for the health care benefit would still be less than its current option. Beyond cost savings on premiums, many believe that consumer-driven health care tends to reduce overall healthcare costs. Some of the experts Susan spoke to at the conference stated that when employees have a greater say in their health care decisions, they make wiser decisions and do not spend as much on health care.

Susan has discussed the HSA option with Frontline's Director of Finance, Allison Jones. From the financial perspective, Allison agrees that the option would be a good step to start controlling health care costs. However, as an employee who would use the benefit, Allison isn't so sure that an HSA with a high-deductible health insurance plan is the right option for the company. Based on Susan's initial explanation, Allison didn't really understand how the HSA worked. Further, she was concerned that she would have to spend more out of pocket on her own health care.

Susan is convinced that the HSA option would offer a significant cost savings to Frontline. However, after her discussion with Allison, Susan is still unsure if it is the right path to recommend for her company.

QUESTIONS:

1. What are some advantages of implementing the HSA option?

2. What are some potential disadvantages of the HAS option?

3. What do you recommend? Why?

Answer 1

1. The benefits of HSA alternative is versatile, which implies the worker claims the record and they are liable to swelling subsidizing limits. They enable workers to picked where they need to get therapeutic consideration and they additionally can picked what sort of consideration they need. There are a few advantages by actualizing HSA (Health Savings Account) alternative in the association. For the business, through actualizing HSA alternative, boss can guarantee the well being and security of its workers. This is likewise gainful for the businesses to inspire representatives about their well being and actualize a work environment health program. The usage of HSA choice additionally gives focal points to the workers as far as sparing expenses.

2. The potential inconveniences are the high deductible for these plans and "It tends to be hard to explore a HRA plan, particularly if a business is executing one out of the blue. Hosting a third get-together director improves the situation a considerable amount, yet only one out of every odd overseer is made similarly. Some may not set aside effort to respond to questions. Others might be moderate on their organization assignments. That is the reason setting aside effort to look into this subject before actualizing the advantage is so important. HSA is certainly not a well known alternative, specialist won't be commonplace, henceforth it is a major test for the organization to clarify the benefits of the HSA to the representatives. Specialists are increasingly worried about their out of pocket costs. The structure of HSA and high deductible medicinal services protection will impact certain laborers to keep away from preventive consideration, which will prompt many serious issues and social insurance costs later on.

3. I would prescribe the organization to remain with the current FSA plan on the grounds that the HSA plan is going to cost them more per representative so it would be helpful for them to remain with the present well being plan that they at present have.My suggestion for Susan Berry is ensure she educates her workers about the points of interest and impediments of having the HSA choice. I would likewise suggest that she offer the HSA alternative to her workers. I feel that offering the HSA alternative to her workers would be helpful and savvy for both the business and the representatives. "The two bosses and workers can get a good deal on protection premiums with lower-cost HSA-qualified medical coverage designs, and can contribute the investment funds to the representatives' HSA. The parities in the HSA can be utilized at representatives' discretion to pay for present or future qualified social insurance costs, while the equalization in the record can possibly win premium free from government pay tax."The cash goes in tax exempt, draws premium tax exempt, and can be pulled back tax exempt whenever utilized for medicinal costs.