Save Your Company Money with the Right Consumer-Directed Benefits

Save Your Company Money with Consumer-Directed Benefits (CDBs)

February 7, 2017

While the average industry enrollment rate for Consumer-Directed Benefits (CDBs) is 22 percent, WageWorks’ clients typically experience an enrollment rate of 30 percent—or higher. We attribute this higher than industry norm enrollment rate to many factors, including helping our clients offer the right mix of benefits that appeal to employees.

If you’re on a mission to save your company money by boosting enrollment this year, pay attention to two trends we’re seeing among our client base that have had a positive impact on participation rates:

HSA-Qualified High-Deductible Health Plan + HSA

In order to reduce healthcare costs and have employees be more active healthcare consumers, many companies have moved to HSA-qualified high-deductible health plan (HDHP). To further help employees mitigate rising healthcare costs, many companies are pairing an HDHP with a Health Savings Account (HSA).

An HSA allows employees to set aside pre-tax dollars to cover their deductible, copayments and/or other eligible expenses not covered by insurance. Plus, their HSA balance accrues interest and grows tax-free. And, when employees are ready to use the money, the funds can be withdrawn tax-free as long as they are used for eligible healthcare expenses.

Enrollment Rate

Here’s an example: A WageWorks client with 1,000 eligible employees implemented a HDHP paired with an HSA. The company set an enrollment goal of 30 percent and met that exact goal, with an average employee HSA contribution of $2,032. This resulted in savings all around—employees saved an average of $609 a year and employer savings totaled $46,635 annually ($2,032 average contribution amount x .0765 payroll tax savings = $155.45 per participant. $155.45 x 300 participants = $46,635).

Healthcare FSA with Carryover

The number one reason that employees don’t enroll in a Flexible Spending Account (FSA) is a fear of losing money. To combat this roadblock, the majority of WageWorks’ clients have shifted to a WageWorks® Healthcare FSA with Carryover, allowing participants to carry over up to $500 of unused funds from one plan year to the next. And, the results have been terrific—many clients who have adopted Carryover report a double-digit increase in enrollment.

Here’s an example: Prior to implementing Carryover, a company with 5,000 employees had a 22 percent FSA participation rate (1,100 employees enrolled).The enrollment rate jumped to 31 percent once Carryover was introduced, resulting in annual employer savings of $155,639.

Saving22

Adopting Carryover is also a great way to attract FSA “rookies” and encourage them to get their feet wet with the benefit. These individuals can contribute $500 as a starting point and be confident that even if they don’t use any of the money, the full amount will be carried over to the next year.