How to Drive HSA Adoption: Find Your Employer Contribution Sweet Spot

In our previous post, we learned the first step to increase Health Savings Account (HSA) adoption is "just get started with an employer contribution.” As you continue to build your HSA adoption momentum, we'll move on to step 2:

• Step 1: Seed Early Adopters
• Step 2: Find Your Employer Contribution Sweet Spot
• Step 3: Mitigate Employee Risk with Your Plan Design
• Step 4: Educate Employees

Let's look at the most common employer contribution amounts, two more personas to target, and how contribution size impacts employee behavior.

Common Employer HSA Contribution Amounts

If you already have HSA participation, but you’re looking to boost adoption, it’s a good time to benchmark your employer contribution. Employers who make a substantive contribution have higher employee engagement.

Pulling from our recent HSA survey, we split the data into two groups when it came to making an HSA contribution: employers who made an HSA contribution and those who made little or no contribution. Employers who made little or no contribution had less employee participation.

Individual HSA Contributions

Employer contributions for individuals clusters at $500 and $1000.

Family HSA Contributions

For family HSAs, the most common employer contribution amounts are $1000 and $2000.

Two More Personas to Target

With a large enough employer contribution, it’s easier for employees to dimension how an HSA can offset their anticipated health care expenses. It’s time target two additional, value-conscious personas who will consider an HSA.

Employer Contribution Size Affects Behavior

Money talks—upping the financial incentive impacts your employees’ risk/reward assessment. The strategy here is to provide the greatest cost savings for you and the largest percentage of your population. We saw this drive dramatic results for The Linux Foundation. After increasing their employer contribution, HSA adoption surged from 6% to 80%.

Pro Tip: To maximize adoption, play with the employer contributions based on your allowable per-employee-per-month (PEPM) budget.

Let’s look at how the employer contribution size affects HSA adoption behavior for cost-driven and value-conscious personas.

• Employer Contribution 1: depicts any type of HSA contribution.
• Employer Contribution 2: demonstrates which employee personas are incentivized when you make a substantive contribution.

Employer Contribution 1 ($)

Any employer contribution drives adoption by your cost-driven employees.

In summary, money talks

Once an employer contribution is large enough, Type C employees are more likely to “jump” into an HSA. It becomes easier to dimension how an HSA can offset their anticipated health care expenses. 

In part 3 of this series, we discuss mitigating employee risk with your plan design. If you pay 100% of the HDHP premium as an employer, you can essentially offer a “free” health plan. It’s a powerful recruiting tool!

If you’d like help boosting your HSA participation, there's no downside to getting a complimentary 30-min consultation. Lumity has experience driving significant results for companies like Greenhouse, Wealthfront, and SquareTrade.