1. finance
2. personal finance
3. insurance
4. health insurance

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
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
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
HSAs for Long-Term Savings
Like DC plans, HSAs can be used as long-term savings vehicles,
but with better tax treatment
Feature
Pre-Tax Contributions
Can be Invested
Pre-Payroll Tax
Tax Free Withdrawal
Traditional
Roth
HSA
Contribution Limit Comparison
HSA contribution limits are much lower than DC contribution limits
Contribution Limit
DC Plans
HSAs
Employee
$18,000
Individual: $3,350
Family: $6,650
Combined
$53,000 or
100% of salary
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.
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
About Kimberly-Clark Corporation
Who We Are
What We Offer
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• 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)
•
•
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
Why Change and Why Offer an HSA?
Prior to 2015: EPO/HMO (40% enrolled), PPO (42% enrolled), and CDHP HRA (11% enrolled)
Why Change:
Why HSA:
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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
Comply with Health Care Reform
Stay competitive
Promote consumerism and
employee accountability
Communicating the Change & Results
Communication Mediums:
Communication Medium Results:
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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
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
Our Vision and Goals for 2015
Communication Vision:
Communication Goals:
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.
• Experience: Simplify and integrate the
employee experience
• Integrate: Improve health and financial
wellness
• Partnerships: Improve internal relationships
• Leverage: Fully use vendor resources
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
Why Change and Why Offer an HSA?
Why Change
Why HSA
– Expense management/cost
• Lower premium option vs PPO
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Medical – PPO only
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Eligibility (active and retiree)
VEBA plan (funded by DePauw)
Provide employer contribution to
HSA (Single/$1,000, Family/$2,000)
• Encourage participation
– Expand employee participation • Opportunity for pre-tax contribution
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Add High Deductible with HSA
Transition VEBA eligibility
(grandfather)
• Currently approx. 50% participation
in each PPO and HSA group medical
plans
DePauw University is self-insured for group medical
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.
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
Health Care Costs are Increasing
Health Saving Accounts are Increasing
Addressing the Longevity Revolution
$283,000
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
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
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