You’ve planned your 2019 open enrollment, created a communication program and worked closely with employees to encourage them to enroll in the HSA-qualified health plan and open an HSA. As a benefit professional or business owner, you’ve done everything possible to increase participation. More employees enrolled in the HSA plan, but some of them have yet to open the HSA.
Why does this happen? There is considerable agreement among benefit industry experts that the main reason is a lack of understanding around the HSA, including how the account works and what the benefits of having the account are. There are several messages than can increase participation, many of which involve educating and explaining HSA benefits.
Key HSA Messages to Share with Employees
One important message is clarifying the differences between HSAs and FSAs, arguably the greatest source of confusion among employees. Many believe that the two accounts are the same, particularly regarding the so-called “use it or lose it” provision of flexible spending accounts. HSAs are owned by the employee and the funds in the account are theirs to keep and are not lost at the end of the year – or ever. This point alone could increase HSA open rates. One way to explain the difference is to emphasize the names of the two accounts: Flexible spending account vs. health savings account. The FSA is meant to be spent while the HSA can either be spent for current qualified medical expenses or saved for future expenses.
Communicate the value of the HSA as a tool for saving for the increasing cost of healthcare. Contributions to the HSA help meet deductibles and other out-of-pocket healthcare costs. The account contributions are made pre-tax, and the contributed funds will help employees save on their tax bill, thereby helping to subsidize those contributions. It is worth reminding employers that one of the tax savings comes from lower FICA payments, employers will save their half of the payment as well, creating a win-win.
Saving on the FICA tax is only one of three tax advantages realized when contributing to an HSA. Contributions not used for qualified medical expenses grow tax free, and funds used for qualified medical expenses can also be withdrawn tax-free, making information about the triple tax advantage of the HSA very compelling for employees. The HSA tax benefits are greater than any other account used for saving or even retirement. That HSA tax deduction can be important to employees at any income level.
It is also important to educate employees about the importance of investing the HSA funds to help the account grow. Whether you’re healthy or have annual medical expenses, investing the funds in mutual funds rather than a cash savings account helps the account grow. Because many HSAs require a minimum balance be left in the cash account, communicating with employees about the importance of investing should be part of the messaging sent year-round. It may take the employee a bit of time to reach the minimum investing threshold, so it is effective to remind them of the opportunity so that they can move funds once they are ready. Education can also cover becoming an investor and why they should take the step.
An HSA can be opened at any point throughout the year so it's worth sending HSA communications throughout the year. And remember to talk dollars and sense. Concrete estimates on tax savings, growing the account and how special the triple tax savings can benefit employees are all powerful messages that shouldn’t be ignored. And don't be afraid to repeat messages. This can be an effective way to reinforce key messages.
Some planning and education can go a long way toward increasing the participation in your company’s HSA-qualified health plan. The key is to communicate early in the process and continue the effort throughout the year.
When Bend’s founding team designed the Bend HSA, it was our goal to disrupt the industry by creating an HSA administrator that uses technology to vastly improve service and make the experience better and more effective for our clients. Our offering uses the latest technology to provide the greatest benefits, make it simple to use and educational for employees