By Brenda J. Mullins
At some point or another, many may experience what I like to call “copay blues.” No, I am not referring to the great music of American blues legends. I wish. In short, this phenomenon occurs when somebody experiences an ailment that should merit a visit to the doctor, but they put off the trip for fear of the price tag associated with it. In fact, a recent study found that 64 percent of Americans have avoided or delayed medical care in the last year due to expected costs.1 Neither I nor any health care professional would recommend this strategy, but it is understandable how finances might tempt one to avoid seeking medical help.
Having employees work through a potentially significant illness does a company no favors in productivity and – most importantly – may keep workers from getting better. So, how does a concerned employer encourage employees to handle these potentially fearsome out-of-pocket medical costs? Fortunately, there are four great solutions employers can offer workers to help with these costs.
Flexible Spending Accounts (FSAs)
One option that has been around for some time is the FSA. This optional savings account is used to help pay off various medical expenses and is beneficial to both employers and employees. FSAs provide employers who offer these benefits a reduction in employer and Federal Insurance Contributions Act (FICA) taxes, while also reducing the taxable wage of employees who participate in the plan. And because FSAs allow reimbursement for a wide variety of qualifying health care and dependent care expenses – tax-free – they can be chosen by employees who know they and their families will have health care needs throughout the year.2
In addition, FSAs have contribution limits set by the Internal Revenue Service. For 2019, the maximum contribution employees will be able to make to their FSAs is set at $2,700. The payment plan also falls victim to the “Use It or Lose It” rule, which states that any money left in an employee’s FSA that is not spent by the end of the calendar year – Dec. 31 – is forfeited. However, employers may choose to allow employees to carry over up to $500 to the next year (and forfeit any excess unspent funds) or spend the remaining funds during a “grace period” of the following year.
Health Savings Accounts (HSAs)
HSAs are fairly similar to FSAs in that they provide an optional savings account for employees to use for their medical expenses. Additionally, it comes with similar tax benefits. However, to qualify for an HSA, an employee must have a high-deductible health plan (HDHP). As a result, HSAs are not bound to a particular employer and accompany an individual should they change jobs or enter retirement.2 An additional benefit of HSAs that makes it more attractive is that it does not fall victim to the “Use It or Lose It” rule. Unlike the FSA, where money may disappear if it is not used after a year, the funds in an HSA never expire for any reason.
Value-added services, such as medical bill negotiation and telemedicine, are great ways to help ease the copay blues. The complex language and rules of health care and benefits can be tough for an employee to navigate, making bill negotiation services a great way to help circumvent this difficulty with your employees. Offering a support team that understands the ins and outs of health benefits can help employees negotiate their unpaid medical bills, leaving them with less financial burden and stress. Using telemedicine not only helps reduce missed time from work for being sick, but it can cost the patient an average of $40, compared to a $125 charge for an in-person visit.3 And when an actual trip to the doctor’s office can be substituted for a virtual meeting or an employer offers reimbursement assistance for those unexpected medical costs, employees are more likely to seek treatment, thus helping keep them healthier and happier in the office.
Qualified Small Employer Health Reimbursement Arrangements (QSEHRAs)
QSEHRAs are tailored to suit the needs of small businesses, specifically those with fewer than 50 full-time employees. Through a law passed in December 2016, small businesses can provide employees with maximum flexibility and health coverage cost-savings on a pretax basis. The law states that employer funds contributed to a QSEHRA are excluded from the employees’ taxable and payroll taxes, which can then be used to pay or reimburse employees for premiums on their own individual major medical insurance coverage.
The key caveat in play with the QSEHRA is that an employer cannot offer a group health plan to any employee if they offer this option. Simply put, an employer cannot offer coverage under a group major medical plan to some employees and offer a QSEHRA to others. However, if a small-business owner finds it financially practical to refrain from offering a group insurance policy, a QSEHRA is a great option to save money while helping keep employees happy.
Saying goodbye to the copay blues
From a business perspective, there are several advantages to offering these benefits. First and foremost, they help set small businesses apart from the competition. According to the 2018 Aflac Small Business Happiness Report, while most small-business employees are happy in their jobs, their primary concerns revolve around benefits. In fact, when asked what the greatest challenge of working in a small business is, 28 percent of respondents cited that salary and benefits do not often match those offered by large employers, while 27 percent said they wish they had more affordable health care coverage.4
Although benefits can sometimes be difficult to understand with so many different options out there, they can be exceptionally useful for both employers and their employees. As a small-business owner, take the time now to learn about FSAs, HSAs, value-added services, and QSEHRAs and see how they can help enhance your company’s bottom line, as well as help protect employees from getting the blues when they sense a copay on the horizon.
Brenda J. Mullins is vice president of Human Resources and chief people officer at Aflac. She is responsible for the core human resources functions in the U.S. for Aflac’s more than 5,000 employees and has developed the framework for expanding Aflac’s diversity efforts through recruitment, retention, relationships, reinforcement and recognition.
This article is for informational purposes only and is not intended to be a solicitation.
1 CarePayment. “New CarePayment Research Shows Americans Can’t Afford Their Medical Bills.” Accessed Jan. 4, 2019. https://www.businesswire.com/news/home/20180214006069/en/New-CarePayment-Research-Shows-Americans-Can%E2%80%99t-Afford.
2 Zenefits. “FSA vs HSA: Which is Best For Your Employees?” Accessed Jan. 7, 2019. https://www.zenefits.com/blog/fsa-vs-hsa.
3 Athene TeleHealth. “Telemedicine as an Employee Benefit.” Accessed Jan. 7, 2019. https://athenetelehealth.com/telemedicine-as-an-employee-benefit.
4 2018 Aflac Small Business Happiness Report, Aflac’s survey of 1,000 small-business employees in the U.S. ages 18 and older who have been employed at an organization with 3 to 49 employees for at least one year. Aflac.com/HappinessReport.
Aflac herein means American Family Life Assurance Company of Columbus and American Family Life Assurance Company of New York. WWHQ | 1932 Wynnton Road | Columbus, GA 31999.