Millennials are younger and healthier in comparison to their Gen X and Baby Boomer peers. Are Millennials and HDHPs with HSAs a good fit for employers and TPAs?
A recent study on adults with health insurance shed light on the healthcare spending habits of the up-and-coming Millennial generation. Among the findings are that younger workers have a different view of health insurance than their older counterparts, in addition to different spending and shopping habits.
In summary, the study found that Millennials:
- Are satisfied with their health care plan choices, including those with high deductible health plans (HDHPs). This is partly due to the fact that they are healthier and tend to use healthcare services less often than older workers.
- Engage in shopping around and comparing costs for healthcare services, procedures, and medications. Millennials particularly like employer-sponsored benefits such as HSAs with employer contributions and incentives to use cost-comparison tools.
- Exercise more often and maintain normal weight, but are also more likely to smoke.
Given the study’s findings, Millennials and HDHPs, with HSA eligibility, appear to be a perfect fit for employers and TPAs.
Employers, Millennials and HDHPs
Employers are always looking to keep costs under control, while also attracting and retaining talent to help build a successful business. Adding an HSA-eligible HDHP to benefit package choices can kill two birds with one stone. With an HDHP, employers generally pay less towards healthcare premiums. Further, if an employer decides not to offer insurance plan choices, they could be losing out: one in three Millennials have turned down a job partly because of poor insurance options.
The younger, healthier Millennial generation is embracing the idea of consumer-directed healthcare. With an HSA/HDHP, they can save money for future medical needs, and when the time comes, use that money to pay for services. As savvy healthcare shoppers, they have control over their dollars and can make more informed decisions. In addition, many HSA providers have wellness programs and incentives, which can help people kick unhealthy habits such as smoking.
What does this mean for TPAs
For third party administrators who are looking for ways to boost their bottom line and increase their service offerings, HSA administration could be the answer. It appears that employers are increasingly looking to an HDHP option: a 2015 study found that over 80 percent added HDHPs to their health insurance options, while one-third of employers chose to only offer HDHPs.
TPAs have the experience and the knowledge to jump into this market and hit the ground running. Currently, the biggest competitor for TPAs in the HSA market are banks, who sometimes offer HSAs for free. The real challenge for TPAs is finding an administrative platform option that offers simple account setup and administration, and the flexibility to adapt to diverse employer needs. In addition, they need a platform that offers modern features in order to make HSAs even more attractive for workers.
HSAs by themselves are enticing between the tax-free contributions, withdrawals and earnings. But workers also need convenient access to their account funds (e.g., a debit card), and a mobile app from which they can view account balances and submit claims, among other functions. These are some of the perks that can help incentivize enrollment, especially among the tech-inclined Millennial workforce.
The past decade has seen a rise in Millennials in the workplace, and they bring many talents with them. As smart consumers who utilize and accept consumer directed healthcare, they want more options when it comes to health insurance plans. For employers, adding an HSA-eligible HDHP plan to their insurance choices may be the way to attract younger workers and also control healthcare expenses. TPAs who are looking for opportunities to grow their businesses should consider adding HSA administration services to their portfolio. The market is right for a win-win-win scenario for everyone.