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Benefits

Cookie Cutter Benefits Decision Support Just Can’t Cut It

Dana Borrero

## The B.E.N.E.F.I.T.S of FSAs

With the end of the year approaching, your employees might be sitting on an unused FSA balance. Since FSAs are “use em or lose em,” it’s important for employees to understand that if their balance isn’t spent in time, they might lose the money they’ve contributed. 

Many employees typically use their FSAs for provider copays, prescriptions, and other health-related expenses — but if they don’t have healthcare expenses in the coming weeks, they’ll need to use their balance on other costs, or risk losing their investment.

Here at Nayya, we love benefits, and we love helping employees get the most out of their finances, so we made a fun BENEFITS acrostic poem to help you communicate to employees the different things they may not have realized they can spend their FSA dollars on. 

**B:** 
Band-Aids: From heavy-duty bandages, to Finding Nemo themed band-aids for your toddler, you can use your FSA money to stock up on band-aids for you and your family.

**E:**
Eye Care: Whether it’s eyedrops, eyeglass accessories, or even eye surgery, FSAs can support your vision needs before the year is up.

**N:**
Nicotine Patches: If one of your New Years Resolutions is to quit smoking, this may be the perfect way for you to spend your FSA funds.

**E:**
Ear Thermometers: Cold, flu, and Covid season is upon us, having a thermometer handy at home can help you monitor your family’s health throughout the season.

**F:** 
First Aid Kits: It never hurts (no pun intended) to have a first aid kit on hand. Stock up on first aid supplies for your home, car, or grab a travel kits for minor emergencies on-the-go.

**I:** 
Ibuprofen: If the constant holiday tunes and family gatherings are giving you a month-long headache, this might be the option for you. Just kidding (sort of).

**T:** 
Taxi fare / travel expenses to receive medical care: This is a unique one! If you or a loved one need medical attention and you don’t have a car, you can use your FSA expenses to cover medical related travel expenses (like the cab to the E.R. or urgent care).

**S:** 
Sunscreen: Despite the chilly weather, the sun is still strong! Stock up on sunscreen to combat the winter sun (or, to bring with you on your post holiday beach vacay) with your leftover FSA funds.

These are some great benefits you can use your FSA dollars on, but this is far from the exhaustive list! Employees can check out the [government-provided FSA store](https://fsastore.com/fsa-eligibility-list/) to learn about all of the unique options that they can use their FSA funds to purchase before the year is up.

We've put together a list of all of the unique things employees can spend their FSA funds on before the year is up!

FSAs: Unique Ways to Use Funds Before Losing Them

## Healthcare Benefit Costs to Increase

If there's anything that the last few years have taught us, it's that having a competitive benefits package is critical to a company's success. Attracting and retaining top talent has become increasingly difficult, and one of the key ways to stay ahead of the curve is by offering a benefits package that meets or exceeds the needs of employees and their families, giving them peace of mind. However, with healthcare costs rising faster than the rate of inflation, it's becoming more and more difficult for companies to offer comprehensive benefits packages without breaking the bank.

A recent study by Willis Towers Watson looks at the projected costs of healthcare benefits for 2023 and how they will impact employers.

## The 2023 Global Medical Trends Survey

For the 2023 Global Medical Trends Survey, Willis Towers Watson interviewed 257 leading health insurers in 55 countries over the summer of 2022. The survey projects that global healthcare benefits costs will increase to the highest level we've seen in over ten years. 

On average, global healthcare benefit costs are projected to increase by 10% in 2023, according to the report. This is a significant increase from the 8.8% rise we see in 2022 and the 8.2% in 2021.

## What's driving these increases?

There are a number of factors that are contributing to the rising cost of healthcare benefits. Here are some of the key drivers:

- **Global inflation**: Between the current international conflicts and supply chain issues, inflation has rapidly risen. This has directly impacted the cost of healthcare benefits as providers pass along inflation increases to employers.
- **The pandemic**: The ongoing COVID-19 pandemic has resulted in both a higher utilization of healthcare services and an increase in the cost of treatments. Many countries are still dealing with this pandemic, and the costs associated with the long-term effects are still being felt and difficult to predict.
- **Overuse of services**: The number one driver behind the rising cost of healthcare benefits is thought to be the overuse of services, ranked first by 74% of insurers. This means medical professionals are ordering more tests and procedures than necessary and overprescribing medications. This, in turn, drives the cost of healthcare up without necessarily improving the quality of care.
- **An increase in chronic conditions**: Along with an aging population, we're also seeing a rise in the number of people living with chronic conditions such as diabetes and heart disease. These conditions require more frequent and more expensive treatments, which drives up the cost of healthcare benefits.
- **Increase in mental health services**: For a long time, it felt like mental health was not acceptable to discuss in the workplace — but it's becoming more and more common to talk about these issues and seek treatment for them. The pandemic has also taken a toll on mental health, with anxiety and depression rates skyrocketing. The increased demand for mental health services has driven up the cost of overall healthcare benefits.
- **Poor lifestyle habits**: Despite all of the available information about the importance of maintaining a healthy lifestyle, unhealthy habits like smoking, drinking, poor posture habits, and a sedentary lifestyle are still quite common. These poor health habits can result in more serious or chronic health problems down the road, which drives up the cost of healthcare benefits.
- **Lack of preventive care**: Many people still don't see the importance of preventative care, such as routine physicals, screenings, and dental cleanings. The lack of preventive care often leads to more severe problems, which are more expensive to treat. The years of the pandemic lockdowns have also led to a decrease in preventive care. Many people have been afraid to go to the doctor or dentist, and access has often been limited due to physical distancing restrictions. Healthcare providers are still playing catch up to provide the necessary preventive care that's been missed over the past few years, and many patients are now dealing with the consequences.

## Healthcare cost increases across the globe

Although all countries are projecting an increase in healthcare costs for 2023, there are significant variations by region. In North America, for example, healthcare benefit costs are projected to increase by only 6.5%, lower than the 9.4% increase in 2022. 

In contrast, most regions will still see an acceleration in the growth rates of their cost of benefits.

Experts project that average healthcare benefit costs will increase in the Middle East and Africa by 11.5% in 2023, versus 10.5% in 2022, in Asia Pacific by 10.2% versus 6.9% in 2022, and in Latin America by 18.9% from 18.2% in 2022. Even in Europe, where healthcare costs have traditionally seen lower increases, they predict a rise of 8.6% in 2023 versus 8% in 2022.

Experts have warned that healthcare costs will carry on increasing unless we make fundamental changes to the way care is delivered.

## How to keep healthcare costs down

If employers want to keep their healthcare costs down, they need to make some changes to the way they're approaching benefits. Some of the ways they can do this include:
- **Offering incentives that encourage employees to live healthier lifestyles**. These incentives can include discounted gym memberships, on-site wellness programs, health coaching, healthy food options in the workplace, and health risk assessments.
- **Encouraging employees to use preventive care services**. This can be done by offering free or discounted screenings and physicals. Education is also key, and employers can provide educational materials on the importance of preventive care and how it can save money and improve quality of life in the long run.
- **Ask employees what they want from their healthcare benefits**. By understanding what your employees value, you can design a benefits package that meets your employees' needs and helps keep costs down. Using decision support software like Nayya can also support employees to make better choices about their benefits and find the providers that offer the best value for their specific needs, optimizing healthcare costs without sacrificing the quality of care.

A competitive benefits package is still a crucial element in attracting and retaining top talent. With healthcare costs still projected to increase, employers need to be strategic about how they design and manage their benefits as a recruiting tool.

With the right approach, taking proactive steps to support employees in maintaining good health and a balanced lifestyle and using decision support technology to make benefits more cost-effective, it is possible to keep healthcare costs down while still providing a comprehensive benefits package that meets the needs of your employees or potential candidates.

According to research from Willis Towers Watson, healthcare benefit costs will increase in 2023.

Global Healthcare Benefit Costs to Increase in 2023 

## Businesses, they’re just like us

Inflation is everywhere, and it’s no longer just employees that are feeling the hole in their wallets. Just like their employees, businesses are struggling to manage inflated costs, and are looking for ways to save wherever they can (see: the deluge of major tech layoffs over the past month). 

While us employees are holding out for Black Friday deals to lower costs on cold-weather clothing and holiday gifts, businesses are simultaneously hunting for innovative ways that they too can lower costs going into the new year.

With open enrollment season in full swing, eyes are on HR teams to drive cost-savings through their benefits programs this year. Easier said than done. Many HR leaders know that cost-savings can be achieved through a stellar approach to benefits, but the _how_ is the real question. 

So, what’s one way HR teams can drive savings through their approach to benefits? By **increasing employee contributions to pre-tax savings accounts like 401Ks, HSAs, and FSAs**. The best part? This will also benefit (no pun intended) your employees. 

Read on to learn how increased contributions can drive savings at both the organizational and employee level, and how HR teams can drive up contributions this year.

## Payroll tax savings

To put it simply, employers are subject to payroll taxes on the total compensation that they pay their employees. If you are able to increase the overall participation and allocation of your employee’s salaries into tax advantage programs (think: 401K, HSA, FSA, etc.), you’ll then lower the total compensation that is subject to payroll taxation.

For example, if an employee is making a salary of $100,000, and they are contributing 3% to their 401K and 2% to their HSA, then your company is subject to payroll taxes on the total salary minus the 5% that the employee is contributing, so $95,000. If you’re able to increase those contributions, and the employee is now contributing 6% to their 401K and 4% to their HSA, you’re now only subject to payroll taxes on $90,000. 

By increasing the amount that employees are contributing to their pretax savings accounts, employers save on the total payroll tax they have to pay that year.

## Employee savings

The unfortunate thing about employers needing to cut costs is that typically, their approach negatively impacts employees — think: mass layoffs, lower bonuses, lessening perks and benefits that cost too much, etc. That’s the best part about this strategy, it only helps employees in the long run.

By educating employees on the benefits of their different pre-tax savings accounts and driving up enrollment in those accounts, employees can experience both short and long term winnings. 

In the long term, employees who increase contributions to their 401K now will see exponential growth and larger savings accounts when they choose to retire. And in the short term, HSA and FSA accounts will help employees combat unexpected healthcare costs like prescription charges, provider copays, and more.

Not to mention, by increasing contributions to their pretax savings accounts, employees are also saving on taxes. If that same employee is being taxed on their $100,000 salary, but now they’re contributing 10% to their 401K and HSA, they’re now only going to be taxed on $90,000. 


## Sounds easy enough…

Increasing employee contributions sounds like a win-win, so why isn’t this approach talked about more? 

Unfortunately, there’s an education gap that exists within most organizations. Employees may not realize how truly beneficial these savings accounts can be. 

This is especially true for the newer members of the workforce — Millennials and Gen Z employees who are fresh off their parents’ insurance might not understand the benefit of having an HSA for example, and might just see it as less money in their paycheck each month. What they don’t realize is that they’re still making that money, but it won’t be taxed and it’ll be put in a unique account that they’ll be able to use for unforeseen expenses, like hospital visits, expensive prescriptions, copays, and more.  

We need to shift the narrative from "that's less money in my bank account each month" to "that's my ever-growing savings account that I don't even need to think about but will be there for me in case of emergencies."

To drive contributions to these savings accounts, employers and HR teams will need to focus on bridging the education gap and giving employees the confidence to elect the right benefits and make the right contributions for themselves and their families. HR teams can educate employees on not only what the savings accounts are, but also provide real-life scenarios that depict how employees can use and benefit them. 

However, building and disseminating this education can be increasingly difficult for employers who have thousands of employees that may be geographically distributed, work around the clock, and have different health, financial, and family structures. This is where a [decision support tool](https://www.nayya.com) for benefits can come into play.

## What is decision support?

In short: decision support tools help people make better decisions. So benefits decision support tools help employees choose the right benefits during enrollment.

Benefits decision support technology can help alleviate HR burden and save organizations time and costs associated with benefits enrollment. A decision support tool can provide employees with unique education about the benefits that are being offered to them, and help arm them with the tools and confidence to make the best decisions for themselves and their families during enrollment.

Nayya, for example, takes employees through a short questionnaire to understand their needs and goals. From there, it educates employees on the right benefits for their unique situation. If the employee would best benefit from an HDHP, Nayya will explain to them why an HSA goes hand in hand, and why they should consider contributing to an HSA. Nayya also offers real-life scenario planning to help employees understand how contributions will accumulate and how they can use the HSA down the line. 

By introducing a decision support tool during enrollment, employers can demonstrate the value of pre-tax savings accounts to their employees, and ultimately drive up participation and contributions to these accounts. 

Nayya has saved organizations over $17 million in payroll taxes to date. In a world where saving the company money very seldom benefits the employees, and an economy where inflation is running rampant, driving up contributions to these types of accounts is one of the few win-win options. 

If you’re ready to learn more about how Nayya can help educate employees, create benefits confidence, and drive up participation and engagement during enrollment, [learn more here](https://www.nayya.com/get-demo).

Learn how driving up contributions to pre-tax accounts like HSAs, FSAs, and 401Ks can benefit employees and employers alike.

Cookie Cutter Benefits Decision Support Just Can’t Cut It

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FSAs: Unique Ways to Use Funds Before Losing Them

Global Healthcare Benefit Costs to Increase in 2023

Ready for a Win-Win? How to Drive Organizational and Employee Savings

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