As health consumers in the U.S. take on more financial responsibility for paying for health care out-of-pocket, they’re feeling the tug on their wallets and savings accounts. Quickly, financial services companies are coming into focus for people to look to at the nexus of physical and financial health.
Consumers trust financial service companies – say banks, or investment firms managing a worker’s 401(k) plan – more than health plans and hospitals, according to the American Customer Satisfaction Index survey from 2014. This gives credit unions, banks, internet brokerages and insurance company the opportunity to leverage consumers’ trust in them to bridge financial wellness.
Source: ACSI Customer Satisfaction Benchmarks by Industry, 2014
Health comes to life insurance. In April, John Hancock launched a life insurance policy linked to health tracking. John Hancock is flipping the idea of life insurance to shift it a bit in favor of health. The company is teaming with Vitality, a long-time provider of wellness tools programs, to create insurance products that incorporate discounts for healthy living. The programs also require people to share their data with the companies to quality for discounts, which the project’s press release says could amount to $25,000 of savings over the course of a life of a couple buying insurance at 45 for a benefit of $500,000, assuming the couple live to 85.
Participating in various activities in the program, such as tracking steps and quitting smoking, will earn policyholders Vitality Points, which can result in as much as a 15% discount on the life insurance premium each year.
Banks link fitness tracking to bank accounts. Marking the annual collective endeavor to lose weight and get healthy on January 1st, TD Bank offered Fitbit activity tracking devices to customers opening new accounts. What does a bank have to do with health? Plenty, if you listen to 70% of consumers who say that financial health has a positive impact on physical health.
TD Bank released the Fiscal Fitness survey, learning that consumers make a direct connection between fiscal and physical fitness: 80% of consumers made a health resolution in the New Year and 69% of people made a financial resolution; and, 40% of people want to save more and spend less, and 42% want to get healthy and stay in shape.
This led TD Bank to gift Fitbit FLEX trackers to customers opening new retail accounts at TD Banks to bridge health and wealth in the eyes of savers.
Wearable tech’s next frontier: personal finance? Several banks, such as Standard Chartered in the UK, Banco Sabadell in Spain, and New Zealand’s Westpac are piloting wearable technology in trials for consumer finance. Google Glass is a platform for Fidelity Labs, which offers the Market Monitor, sending daily market quotes to the wearable. Discover and Wells Fargo are also working on “Glassware” for consumers to see accounts and financial transactions.
This is part of the growing Internet of Things (IoT) environment, where sensors record our everyday movements. These pioneering banks are thinking that IoT world could change the way people manage their money.
Westpac’s Banking App for a Smartwatch
In the case of connecting dots between physical health and financial health, it is only a few steps (literally and figuratively) from moving from TD Bank’s gifting of the Fitbit, to John Hancock’s activity tracking for premium discounting, and onto using Big Data for personalizing financial services – like Health Savings Account (HSAs) investments and ongoing funding and management of the account.
The stages of health spending and saving. A health savings account is the only tax shelter available that is pre-tax and bears interest – making money while it sits in the account. As such, it truly enhances the health consumer’s financial health. Optum, part of UnitedHealth Group, has a point of view on HSAs and five stages of health spending and saving:
- To decide whether to enroll in a health savings account
- To open that account, getting it up and running
- To use that account, getting basic value out of the HSA
- To manage the HSA, keeping up-to-date with the account responsibilities
- To optimize the HSA, getting the most value out of the account.
Optum notes that consumer mindsets vary within each of these stages: people with a “positive mindset” are proactive, feel confident and in control, and are enthusiastic. Their opposites, health consumers with a negative mindset, tend to feel intimidated, confused, cynical, uncertain, and anxious.
What moves a health consumer from negative to positive are engagement strategies that recognize people where they are on this journey, from growing awareness of HSAs and health insurance literacy in the early decide stage, to helping people enroll and prepare to use their plans, then save and make payments into the plans, maintaining their accounts and tracking inflows and outflows, and finally rebalancing the portfolio and reviewing statements and performance. One of the best ways to grow positivity in this journey is to communicate the idea of “paying yourself back,” which is a key aspect of the tax-advantaged HSA to the consumer. Paying yourself is an empowering message to a consumer, which can bolster that proactive, in-control confidence and financial competence helping a person connect the dots between finance and health.
Watch for the health ecosystem to work more closely with financial services, strengthening consumers’ ability to manage their growing burden of financial management in health care.