With healthcare costs climbing at a higher rate than inflation, it’s no secret that employers are concerned about the long-term sustainability of their employee health plan. Their concern is not just about keeping employees healthy and productive; the financial success of the health plan (or lack thereof) can have major implications for the employer’s budget and overall profitability.

One of the most common causes of growing employee health plan costs is that employees haven’t been using the health plan and availing themselves of the services that are designed to make them healthier. And the reason? It often comes down to the costs for employees.

The Risk of Low Preventative Health Plan Utilization

When it’s difficult to pay for their day-to-day expenses, employees often put personal health-related expenses on the back burner. According to KFF, more than one-third of Americans report delaying or foregoing needed healthcare because of cost. [KFF.org] In addition, KFF notes that 4 out of 10 adults do not continue with recommended prescriptions due to costs. [KFF.org]

CFOs know there’s great risk with low preventative health plan utilization. There’s risk of encountering high-cost claims and at a more frequent rate. There’s risk of health plan budgets continuing to increase and budgets becoming less controllable. It also becomes increasingly difficult over time to predict budget requirements and to shield the budget from volatile health plan costs.

Early utilization of the health plan not only helps employees be healthier but also helps to prevent even larger health-related expenses down the road. How can employers make it easier for employees to overcome the cost barrier for health expenses? One key answer lies in Health Savings Accounts (HSAs).

The Role of Health Savings Accounts in Early Intervention & Treatment

Consider a common scenario. An employee begins experiencing recurring symptoms and knows they should schedule a follow-up visit with their physician. However, concerned about the out-of-pocket costs for the appointment, diagnostic testing, and any resulting treatment, they decide to delay care. Months later, the condition worsens, requiring more extensive treatment and significantly higher healthcare costs.

Now consider the same employee with an adequately funded HSA. Because funds have already been set aside specifically for healthcare expenses, the employee is more likely to schedule the appointment, complete any recommended testing, and begin treatment earlier. Not only is the employee able to address the condition sooner, but the health plan may also avoid a larger claim that could have resulted from delaying care.

Employers use Health Savings Accounts (HSAs) to equip employees to pay for their healthcare. HSAs are paired with high-deductible health plans, which typically have lower premium costs for the employer. After enrolling in the high-deductible health plan and opening a Health Savings Account, employees can contribute to it directly from their paycheck. Employers can also match employees’ HSA contributions, providing a direct investment in employee healthcare.

HSAs and Preventative Health Plan Utilization

The use of Health Savings Accounts benefits both employees and employers by driving preventative health plan utilization. Here are 3 ways:

1. Dedicated Funds for Healthcare

When employees have a savings account specifically dedicated to covering their healthcare expenses, employees no longer must choose between paying for groceries and paying for healthcare. Instead, they’re empowered to take care of their health in proactive ways.

2. Less Postponing of Healthcare Treatment

Preventative care screenings often reveal the need for additional tests or follow-up care. Because employees have designated funds for this additional care, they’re less likely to postpone treatments and can instead be treated when the condition is most treatable.

3. Better Adherence to Treatment Plans

Whether it’s taking ongoing prescriptions or going for follow up treatments, employees with designated healthcare funds have a higher likelihood of sticking with their ongoing treatment. And when they do, they reduce the chances of the condition getting worse, ultimately reducing the financial risk for the health plan.

The Outcome for Employers

HSAs help employers with health plan costs just as much as they help employees with healthcare costs. According to a review by EBRI of 2024 HSA activity, more than half of Americans withdrew funds from their HSA. [EBRI.org] This indicates that employees with HSAs are indeed using them to cover their health expenses. This is good news for employers.

Employees who are equipped to pay for their healthcare are much more likely to use the health plan. Preventative health plan utilization enables employees to catch and treat health conditions early, which can intercept high risk diagnoses and high-cost claims. This short-term care and long-term prevention ultimately come back to support the employer’s bottom line.

Next Steps

To use Health Savings Accounts to drive proactive employee health plan utilization and to manage your rising health plan costs, Request a Quote. With our decades of experience, BMA can help you and your employees overcome the high cost of healthcare today and in the years to come.