Nationwide, analysts estimate that just 60 percent of consumers who are enrolled in a health plan eligible for a Health Savings Account (HSA) actually open the bank account. And with employers often offering to contribute funds, that means many consumers are leaving "free money" on the table.

 

Not at Wendy's.

The quick service restaurant chain has a 100 percent account opening rate among its employees, and - at the end of 2006 - approximately 95 percent of workers were carrying positive balances in their accounts.

 

Lynn Bauman, director of employee benefits, said Wendy's wasn't about to leave the success of its HSA program to chance. Instead, the company embarked on a concerted effort to ensure that employees actually opened their accounts and had the money available to pay for health care expenses.

 

"We felt because we wanted our people to be a part of this and wanted it to be successful, the company had an obligation to do its part," Bauman said. "We weren't just out to save money by implementing a consumer-driven health plan - we really wanted this to work."

 

The effort began when Wendy's teamed with Exante Bank, which is owned by UnitedHealth Group and is focused exclusively on health-related financial services, to create an integrated enrollment process through which employees automatically open an HSA at the bank at the same time that they sign up for their health plan.

Additionally, management employed a variety of unique funding strategies to ensure employees had funds available as soon as the program began in case they incurred a medical expense early in the year. Overall, Wendy's pledged to contribute an average of 45 percent of employees' deductibles to their HSAs in 2005. The company also deposited three months' worth of contributions on Jan. 1 and every quarter after that.

 

In 2006, Wendy's increased its average contribution to employees' HSAs to 60 percent of the deductible. But, when federal regulations changed to require the HSA policy apply to prescription drugs, management worried about employees on maintenance drugs not having enough money built up to pay for their prescriptions right away. In response, Wendy's increased its Jan. 1, 2006 account contribution to six months' worth of its annual contribution.

 

"From the company's perspective, we knew these moves posed a financial risk because if the person left the company two weeks later, they could take all that money with them," Bauman said, acknowledging that it's more popular for employers to make equal contributions with each paycheck throughout the year. "But in terms of taking care of our employees, we just felt this was the right thing to do."

 

Wendy's decision to partner with Uniprise, a UnitedHealth Group business that works with large employers, to move to consumer-driven health care in 2005 came after years of giving employees just one choice when it came to health care: enroll or don't enroll. And for years, the company's health care trend had climbed upward, ultimately reaching double digits.

 

"We felt like everybody else, that health care costs were out of hand, and we needed to do something different," Bauman said. The company had already tried cost-control methods such as increasing deductibles for outpatient care and raising employees' premium contributions, but those efforts hardly made a dent.

 

So Wendy's pulled together a national task force to develop a long-term strategy for health care delivery, focusing not only on costs, but on fostering a healthier workforce and encouraging employees to take more ownership of their health care decisions. The task force's 16 guiding principles included more choices, more health care tools and more employee engagement.

 

"Another goal was to meet our financial targets, but that wasn't first and foremost," Bauman said. "We kept talking about the similarities with retirement programs and how - with 401ks - we got employees to get away from the entitlement mindset and start being part of the solution."

 

The task force in 2003 identified consumer-driven health care as a possible path, and - because employee ownership was a cornerstone of the group's vision - immediately gravitated toward HSAs since, unlike Health Reimbursement Accounts (which were more common at the time), employees would actually own the money in their accounts.

 

That wasn't terribly different from many progressive employers, Bauman said, but what made Wendy's different was that the company decided to move to HSAs on a full-replacement basis. "Instead of limiting choice, we were actually able to expand choice for our employees this way," he said. That's because the company let employees choose between a variety of different deductibles and family coverage levels. In all, there were 20 different possibilities available.

 

Because the move represented such a shift for employees, Wendy's launched a nationwide educational campaign and gave employees access to computers in each of its restaurants so they could take advantage of online tools and resources, including modeling programs to assess which plan might best meet their own specific health and financial needs. In addition, employees could enroll in the plans via the same online capability.

 

"We talked about the price of each of the different options being based on risk, just like with homeowners or car insurance: the higher your deductible, the lower the  premium," Bauman said. "We also talked about choosing what plan is right for you - not anybody else."

 

The company also returned to its retirement analogy. "Most people didn't have a clue what 401ks were when they were introduced, but they're so common now," Bauman said. "We wanted to do the same thing for health care - but we could tell employees that, really, an HSA is even better because money goes in on a pretax basis and when you take it out, it's tax free as long as you use it for health care."

 

The efforts paid off. Of the two employee groups eligible for health care benefits, both saw slight increases in health plan enrollment the first year that HSAs replaced the company's more traditional health plan offerings. Among management and administrative staff, 83 percent enrolled in 2005, compared to 82 percent the year before. And among shift supervisors in the restaurants, 59 percent enrolled in 2005, up from 57 percent in 2004. Additionally, 60 percent of employees contributed their own money to their HSAs that first year.

 

But getting employees to sign up for the HSA was just one of the challenges the company faced. "We felt that you can get the attention of employees once to sign up for their health plan, but to get it twice, to first sign up for the plan and then go back and open their bank account, was going to be difficult, so we started looking for a streamlined process," Bauman said.

 

By engaging Exante, Wendy's was able to create an integrated enrollment process through which an HSA is automatically opened for each employee at the same time that he or she signs up for a health plan. Bauman said that was different from other processes at the time because most HSAs are checking accounts, and regulations required a consumer's actual "wet" signature for all accounts from which funds could be drawn by check. Because Wendy's employees sign up for their health plan either online or on the phone, having to provide a signature for the account opening would have required an extra step of paperwork, and management feared some employees wouldn't follow through.

 

So, the company decided not to make its HSAs checking accounts. Instead, consumers would be able to access funds in their accounts through health account cards or online, which meant the "wet" signature wasn't required. Because everything could be done online or on the phone, Wendy's was able to offer a single enrollment process, where employees could open their bank accounts at the same time that they signed up for their benefit plans.

 

John Prince, CEO of Exante Financial Services, said Exante is now working with other employers to offer similar integrated enrollment processes. And, when Exante partners with Definity Health to offer employers an integrated health and financial solution that pairs the HSA with online enrollment, an employer contribution and a complete communication initiative, HSA account opening rates range from 84 to 100 percent. Definity is a UnitedHealth Group company focused on consumer-driven health care.

 

Though it wasn't first on the list, Wendy's did keep close tabs on the financial impact of the shift to consumer-driven health care. The company's goal had been to reduce health care trend from double to single digits. But management never expected to get the trend down to 1 percent, as it did in 2005. "And that even included all the contributions we made to employees' HSAs, as well as covering preventive care at 100 percent with no deductible for the first time ever," Bauman said.

In 2006, the company's trend dropped even further: to 0 percent.

 

"Now, our focus is on trying to measure behavior changes, but we know that comes with time," Bauman added. Already the company has several indicators: In 2004, the last year of the previous health plan, 50 percent of workers who responded to a Wendy's survey said they'd had a routine physical. The first year the company switched to HSAs, that jumped to 75 percent of those workers. Also, prior to 2005, 50 percent of employee drug purchases were generic; that's up to 60 percent since the switch to HSAs.

 

"People are thinking more about their health and their health care decisions now that they're involved in the process and know the costs," Bauman said.

And the company is still thinking too - about how to keep the plan evolving, and how to continue to encourage better, more involved health care decisions among employees.

 

For instance, in 2007, Wendy's has opted to take advantage of a new option that allows employers to make a list of preventive drugs not subject to the deductible, in order to encourage disease prevention. The company also will keep employee premiums flat for workers who take a health assessment and is offering $50 gift cards to those who take the next steps as a result of the assessment.

"It hasn't all been easy. Getting employees to change the way they think and change their behavior has definitely been a struggle," Bauman said. "We've had to constantly educate people, but it's been worth it so far, and I think it will continue to be. We know real change takes time, and we're looking at a long-term strategy, not a quick fix."