-- Key Insights for Employers Designing 2006 Benefits --

BOSTON, May 11, 2005 - After more than a year since Health Savings Accounts (HSAs) were first introduced and through ongoing discussions with clients, Fidelity has identified three keys to a successful HSA rollout: make sweeping changes to all health plan designs and require an "active" benefits enrollment; communicate plan adjustments early and in stages; and provide education support and cost calculators that help employees understand the impact of plan changes on a personal level.

HSAs became available last year and are the only savings vehicle to combine multiple features such as tax-advantaged savings for qualified medical expenses, portability, investment options and accumulation potential. A number of large employers added HSAs as part of their health benefits offering in 2005 in an effort to mitigate and reduce the cost of providing health benefits to their workforce.

"Companies who saw the most success in adopting HSAs were those who designed their benefits programs to change employee behavior - the first critical step in reducing costs," said Marc Hallee, senior vice president of health and welfare consulting for Fidelity Human Resources Services Company. "Rolling out an HSA is a good way for employers to introduce employees to the broader concept of personal accountability for health benefits decisions. It empowers employees to better control health care expenses now, while also encouraging them to save for long-term health costs in retirement. This behavioral shift is critical when you consider that most workers are still largely unaware that an average couple retiring at age 65 today needs $190,000 to pay for health care costs."

The three key lessons learned during implementation that can make the difference in the level of success a company experiences in rolling out an HSA are:

Change Plan Designs and Require "Active" Enrollment - Early Adopter employers who saw the strongest HSA enrollment rates - up to half of their employee base in some cases - were those who made design changes to their health care plans beyond just adding an HSA option. This required employees to make a conscious decision about their health care plan during annual enrollment. Employees who did not actively enroll, were defaulted into a high deductible health plan (HDHP) coupled with an HSA. Other companies chose to simply add an HSA option to their existing benefits programs, allowing employees to passively defer into their current plan. As a result, these employers saw lower HSA enrollment rates due to a lack of employee engagement.

Communicate Information Early and in Stages - Early Adopters who communicated new health plan changes early, and in each stage of implementation, were most successful in terms of HSA enrollment among employees. In general, workers need to hear information in different ways, and repeatedly, to really understand their employer's message. Employers need to be prepared to communicate benefits changes as early as six months before a change takes effect, as well as during each stage of implementation. This provides employees with ample opportunity to hear their messages and understand the action they should take.

Provide Education Support to Help Employees Evaluate Choices - As the movement toward more consumer-driven solutions continues, there is a stronger need for education support including cost calculators when it comes to health care benefits choices. HSA Early Adopters stressed that offering such support can help employees understand how specific plan design changes could impact them on a personal level, allowing them to decide whether a program is a good fit for their health care needs.

In addition to the three key lessons learned, Fidelity's Health Care Consultants gathered five more insights from employers who adopted HSAs in their infancy:

	1.	Develop a strategy to determine how HSAs fit in your organization's long-term plans - Employers should clearly understand the role that HSAs will play in their overall benefits strategy. While HSAs have merit and can be a valuable part of a long-term benefits strategy (saving for retiree health care costs), they may or may not be the right fit for an organization.
	2.	Gain support from senior management and front line management - Early Adopters found it critical to gain the support of not only senior management, but also line managers. Fidelity has learned from employees that the most important two people in an organization are an individual's direct manager and the senior manager who impacts them most. It is important that employers engage these managers in rolling out and communicating their benefit plan changes to employees, since these are the individuals they will listen to most.
	3.	Provide some level of employer contribution - When introducing a new benefit plan option, such as an HSA, it is important that employers show their workforce they are serious about making these changes. Early Adopters agreed that a good way to show this commitment is to contribute some of the company's money into its employees' accounts. Providing an employer contribution encourages enrollment rates, and clients have found that the level of funding is not as important as simply making some contribution to the account.
	4.	Model designs to determine impact on various groups of employees - It is critical that employers understand how new plan designs could affect different groups of employees in their population in terms of health benefits costs and consumption. A specific plan design change could have little effect on employees who don't often use health services, but it could have a profound effect on employees who suffer from serious or chronic health conditions. HSAs are not necessarily plans that only benefit the young and healthy, nor are they detrimental to those who use more health care, so employers should carefully model different plan designs to find the one that optimizes their strategic objectives.
	5.	Work closely with your health plan carrier to understand administrative details - Early Adopter employers stressed that the "devil is in the details" when it comes to account implementation and administration. Therefore, it's important to know exactly what your health plan carrier is going to do in different claims situations and how they are going to do it. Working closely with your carrier can help eliminate administrative issues and improve the overall employee experience.

About Fidelity Employer Services Company

Through its Workplace Services offering, Fidelity provides retirement, benefits and human resources outsourcing, workforce effectiveness, payroll solutions and stock plan services to over 19 million American employees and retirees as of March 31, 2005.

About Fidelity

Fidelity Investments is one of the world's largest providers of financial services, with custodied assets of $2.1 trillion, including managed assets of $1.1 trillion as of March 31, 2005. Fidelity offers investment management, retirement planning, brokerage, human resources and benefits outsourcing services to more than 19 million individuals and institutions as well as through 5,500 financial intermediaries. The firm is the largest mutual fund company in the United States, the No. 1 provider of workplace retirement savings plans, one of the largest mutual fund supermarkets and a leading online brokerage firm. For more information about Fidelity Investments, visit www.Fidelity.com.

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Fidelity Employer Services Company LLC
Institutional retirement products and services are offered by Fidelity Investments Institutional
Services Company, Inc., 82 Devonshire Street, Boston, MA 02109