Competing for the Employee s Dollar

Transcription

1 Competing for the Employee s Dollar Moderator: Amy Parker, Managing Director, Investment Consulting, The Newport Group Speakers: Amy Haug, Human Resources Director, DePauw University Alisa Hunt, Director of Benefits, Kimberly-Clark Corporation Bob Kaiser, SVP, Bank of America Merrill Lynch Aron Szapiro, Policy and Finance Expert, HelloWallet

2 What is an HSA? Tax-favored savings accounts designed to help individuals to save for current OR future health expenses Funds can be used without penalty after age 65 A carrot to promote High-Deductible Health Plans (HDHP); must have an HDHP to contribute Different from a Health FSA, which is for current medical expenses; and from HRAs, which allow for employer contributions only

3 How do HSAs and DC Plans Compare? Employer may contribute to both Employees can direct their investments Penalties for early withdrawal Generally, HSAs are not covered by ERISA

4 HSAs for Long-Term Savings Like DC plans, HSAs can be used as long-term savings vehicles, but with better tax treatment Feature Traditional Roth HSA Pre-Tax Contributions Can be Invested Pre-Payroll Tax Tax Free Withdrawal

5 Contribution Limit Comparison HSA contribution limits are much lower than DC contribution limits Contribution Limit DC Plans HSAs Employee $18,000 Combined $53,000 or 100% of salary Individual: $3,350 Family: $6,650 Individual: $3,350 Family: $6,650 High-Deductible Health Plans must have deductible of at least $1,300 for individuals or $2,600 for families.

6 Which Accounts to Contribute to First? HSA contributions are more flexible and provide a greater tax benefit If employees wants to use their HSAs for long-term planning they need to: Invest their HSA to realize benefits of tax-free growth Have sufficient additional savings to cover their medical expenses Ensure they aren t leaving any DC match on the table Decide if they want to use any part of their HSA for medical expenses to determine their investment allocation Determine the proper investment mix for their long-term plan

7 About Kimberly-Clark Corporation Who We Are Headquarters: Dallas, Texas Founded: 1872 in Neenah, Wisconsin Employees: 42,500 worldwide Operations: 37 countries Global Brands: Kleenex, Scott, Andrex, Huggies, Pull-Ups, Kotex, Poise, Depend, Kimberly-Clark Professional Average Age: 46 Average Salary: $78,000 What We Offer Safe Harbor 401(k) plan: 14,374 eligible active employees 93% participation rate; 8.6% savings rate Automatic enrollment, escalation and rebalancing; advisory services; one loan Medical plan designs: National Plans: PPO, CDHP with an HRA, and CDHP with an HSA HMO (4 locations) EPO (union employees only)

8 Why Change and Why Offer an HSA? Prior to 2015: EPO/HMO (40% enrolled), PPO (42% enrolled), and CDHP HRA (11% enrolled) Why Change: Cost: Year-over-year medical trends and costs were unsustainable Competition: Competitors moving to more employee-accountable medical plan designs Consumerism: Most employees were not enrolled in plans that required or encouraged health engagement Design: 2018 ACA excise tax impacts to our health plan design Why HSA: Comply with Health Care Reform Stay competitive Promote consumerism and employee accountability

9 Communicating the Change & Results Communication Mediums: Created a unique website Offered a Decision Support Hotline Held in-person meetings and live webinars Sent numerous print and digital communications: Postcards Annual Enrollment guide General and CDHP-specific FAQs Targeted actionable communications Communication Medium Results: 26,075 website visits 9,686 video views (via website) 1,835 decision support calls received 8,000+ meeting attendees 26,372 hits on enrollment tools Enrollment Results: 97% actively elected 19% decrease in EPO (Union eligible) 7% decrease in PPO 2% decrease in HMOs 39% enrollment in CDHP (HSA and HRA) 7% decrease in HRA 35% increase in HSA Average HSA contribution of $2,356

10 Our Vision and Goals for 2015 Communication Vision: Foster an authentic, action-oriented culture that offers ongoing opportunities to take full advantage of our benefits plans and programs, and equips our employees to make smart health and financial decisions. Communication Goals: Experience: Simplify and integrate the employee experience Integrate: Improve health and financial wellness Partnerships: Improve internal relationships Leverage: Fully use vendor resources

11 DePauw University Who We Are Location: Greencastle, IN Ranked #53 in the top tier of national liberal arts colleges by US News and World Report Employees: 1,100 What We Offer 403(b) retirement savings plan; 5% employee = 8% employer match Medical plan designs; PPO and HSA

12 Why Change and Why Offer an HSA? Why Change Expense management/cost Medical PPO only Eligibility (active and retiree) VEBA plan (funded by DePauw) Expand employee participation Add High Deductible with HSA Transition VEBA eligibility (grandfather) Why HSA Lower premium option vs PPO Provide employer contribution to HSA (Single/$1,000, Family/$2,000) Encourage participation Opportunity for pre-tax contribution Currently approx. 50% participation in each PPO and HSA group medical plans DePauw University is self-insured for group medical

13 Communicating the Change & Results FSA participation = 19% of PPO participants HSA participation = 60% of High Deductible participants 403(b) participation = 94% Participation of eligible employees has seen less than 3% shift in either direction, all 3 plans, since inception of HSA in 2010.

14 Our Vision and Goals for 2015 Onsite health clinic (employees and students) Partnership with hospital system (staff, administration) Reduce health claims expense Slow annual trend increase Wellness programming

15 Health Care Costs are Increasing

16 Health Saving Accounts are Increasing

17 Addressing the Longevity Revolution $283,000

18 Long-Term Financial Wellness It s time to reframe healthcare benefits as a key component of long-term financial wellness. Saving for healthcare should be considered as important as saving for retirement. Current healthcare estimate for couples who retire at age 65: $283,000

19 Using Tax Free Assets Longevity is statistically valid No minimum distribution at age 70 ½ for HSA Use for eligible long-term care Use for Medicare premiums and out-ofpocket expenses

20 Preliminary Findings on HSAs In our review of 500,000 HSA records, we find just 3.8% of eligible participants are investing assets HSAs are a new program; this number could increase as HSA balances increase In HelloWallet, almost no one indicates they plan to use their HSA for retirement Wealthier and better-educated participants are more likely to invest their HSAs