About CVS Health
Headquartered in Woonsocket, Rhode Island, CVS Health is a pharmacy innovation company helping people on their path to better health. Through its nearly 9,700 retail locations and more than 1,100 walk-in medical clinics, the company enables people, businesses and communities to manage health in more affordable and effective ways.
Changing the employee mindset
In the face of rising costs and uncertainty around health care reform, CVS Health embarked on a journey to renew its health and welfare strategy. With locations in all 50 states and over 140,000 benefits-eligible colleagues, the Fortune 10 sought to offer one set of health plans that works for everybody in the company.
Under this strategy, the new health plan direction had to meet three key principles:
- Alignment with company purpose and values: helping people on the path to better health, while maintaining a strong culture of innovation
- Focusing resources to manage costs below trend for colleagues
- Promoting accountability and engagement amongst colleagues
As an early adopter of consumer health strategies— having introduced colleagues to Health Reimbursement Arrangements (HRAs) in the early 2000s—CVS Health ultimately decided to “stay in the game” and build its health and welfare strategy around the tax-advantaged Health Savings Account (HSA) option, via High Deductible Health Plan (HDHP) offerings.
Early HSA adoption results
In an effort to ramp up to a full-replacement, consumer- driven health plan model, CVS Health introduced a health plan comprised of an HSA option, in addition to a a slimmed-down traditional PPO offering.
“Our goal was to be transparent with our colleagues from day one, that this is the direction we were headed, and would be going full replacement in the next plan year,” Borque noted. “We encouraged colleagues to come along with CVS Health on this journey as early adopters to learn about the HSA-based plan, try it out, and become advocates to share their experiences with other colleagues.”
CVS Health experienced a 40% HSA enrollment rate in the first year it was offered—far and above the company’s expectations of 10-15%.
The following year, CVS Health completed its transition to a full-replacement consumer-driven plan, offering three HDHP options bundled with an HSA. Each plan had varying deductibles and out-of-pocket maximums based on salary bands.
It was important for CVS Health to offer an employer-funded contribution to the HSA at the beginning of the plan year (and on a quarterly basis thereafter), so that colleagues had immediate coverage for care (higher contributions for lower wage earners; lower contributions for higher wage earners).
CVS colleagues heeded the call to the new health and welfare strategy, with more than 95% of the workforce electing full active enrollment.
Identifying the “fear factor”
While colleagues were becoming more engaged with their health plan and beginning to understand the true costs of health care, there still remained an overwhelming concern around the potential of large claims at the beginning of a plan year, and a lack of funds to provide coverage.
The employer quarterly seed funding was a start, but CVS Health quickly realized something more was needed to alleviate the fear factor.
HSA On Demand delivers peace of mind
“We knew we needed to address the cash flow concern. We gathered all of this feedback, and the biggest changes we made for the next plan year were transitioning our HSA administration to ConnectYourCare and introducing HSA On Demand,” noted Bourque, adding that CVS Health also changed the frequency of its employer contributions from quarterly to semi-annually— an investment CVS Health made to give colleagues twice as much money up front on the first day of the plan year.
HSA On Demand enables employees to cover health care expenses when there may not be enough money in the HSA at the time of the service. Participating employees have access to their full year’s HSA contribution— including both employee and employer funds—at any time of year, right at the time of service.
“It was important to give colleagues a safety net if they had a claim earlier in the year, to borrow against their future contributions.”
HSA On Demand did just that. ConnectYourCare’s unique solution enabled colleagues to access to their full year’s contributions at any time of year, ultimately eliminating the upfront risk of a catastrophic financial event and providing peace of mind.
HSA On Demand highlights
Acceleration with Minimal Risk: Average funding amount accelerated to colleagues was $92—far less than the dollar amount expected. Further, total employer funds accelerated made up only 5% of the funds the company budgeted to accelerate.
No reports of large claims early in the plan year: Typically, accelerations were made to cover colleagues’ prescriptions that needed to be filled on the first or second day of the plan year, or doctors’ appointments.
Increased employee engagement: 60% of colleagues are contributing their own money to their HSAs (considering half of the population earns less than $35K annually).
HSA and investment balance growth: Year-over- year growth since inception of the HSA On Demand program.
Increased online enrollment: 95% of all colleagues enrolled online, despite email limitations by nature of business.
“We’re really proud of these numbers, over three years running now. HSA education continues to be a priority for CVS Health, and it’s really exciting to see funds and investments grow as these colleagues have had accounts for a couple of years.
“I think the best part of HSAOD from a colleague’s perspective is that is just happens automatically. They walk in and they swipe their card for an eligible medical expense, and the funds are there for them.”