Unlocking the Power of Health Savings Accounts: Strategies for HR and Benefits Professionals to Optimize Employee Benefits and Financial Health

Healthcare expenses are always on the rise, and it’s up to employers to help their employees manage these expenses. One popular solution is offering a health savings account (HSA), which provides tax-advantaged savings for employees to use on qualified healthcare expenses. HSAs are increasingly popular, and in 2021, it was estimated that around 35.5 million Americans were enrolled in health savings accounts. However, many people are not using their HSA accounts to their full potential. Here are some ways that employers can better educate their employees on how to maximize their HSA benefits.

Increasing Enrollment in Health Savings Accounts (HSAs)

Employers can increase the enrollment in HSA accounts by providing regular communication about the benefits of HSAs. This communication can include highlighting the tax-saving benefits, explaining how HSA contributions work, and providing guidance on how to enroll in an HSA. Employers can also provide incentives for employees who enroll in an HSA, such as matching contributions or a bonus.

Enrolling in HSAs but Not Funding: a Common Problem

One common issue with HSAs is that employees may enroll but not immediately fund their account. This usually happens when employees forget the option exists or don’t know how to fund their HSA account. Employers can help address this issue by providing regular reminders on funding the account and offering guidance on how to do so. Providing resources such as videos, FAQs, or an HSA guidebook can also be beneficial.

Not utilizing the HSA option for HDHPs

Another issue is that even though an HSA is an option for people with high deductible health plans (HDHPs), around 50% of individuals who are enrolled in a qualified HDHP don’t open an HSA. This may happen because of a lack of knowledge, misunderstanding, or confusion around how HSAs work. Employers can help address this issue by providing education on the benefits of HSAs and why they are a good option for people with HDHPs.

The Triple-Tax Advantage of the HSA: A Great Place to Start

One way employers can encourage people to enroll in an HSA is by explaining the triple-tax advantage HSAs offer. The HSA account provides tax-free contributions, tax-free interest earnings, and tax-free qualified withdrawals. This is unlike any other savings vehicle, and it’s a valuable benefit.

HSAs for everyone, regardless of age, income, or lifestyle

HSAs are for everyone, regardless of age, income level, or lifestyle. Employers can educate their employees on the flexibility of HSAs and how they can be used to cover a variety of medical expenses, including preventive care, prescription medications, doctor visits, and more.

Utilizing HSA Funds for Everyday Healthcare Needs

One thing that people might not consider is using HSA funds to pay for everyday health needs or routine healthcare services. Some expenses that are eligible for HSA reimbursement include eyeglasses, contact lenses, and first aid items, among others. Employers can provide resources to help employees understand what expenses are eligible for reimbursement.

Including real-world examples to encourage HSA utilization

An HSA’s savings potential can feel abstract to employees who have never used their account, so it’s important to include real-world examples. This can include sharing case studies or stories of employees who have maximized the benefits of their HSA accounts.

Providing a tax savings calculator to help employees plan for future needs

You can point employees to a free tax savings calculator that can help them estimate their savings potential in real-time and better plan for their future needs. A calculator can be an effective way to show employees how much they can save by enrolling in an HSA.

Saving receipts for all healthcare expenses can help maximize the benefits of an HSA

Since HSA administrators don’t track the purchases account holders make with their HSAs, it is recommended that employees save receipts for all healthcare expenses and over-the-counter products they purchase. This will make it easy for account holders to reimburse themselves from the HSA whenever necessary.

Educating employees on the appropriate use of HSAs beyond the open enrollment period

By looking beyond the open enrollment period to educate employees on how to use their HSA throughout the year, HR teams can encourage appropriate utilization and improve corporate outcomes. Employers can provide regular communication and resources to help employees understand how to maximize their HSA benefits.

By providing education and resources on how to maximize HSA benefits, employers can help employees make the most of their healthcare dollars. Regular reminders, education, and resources can also help boost enrollment and increase employee satisfaction. Employers who prioritize helping employees manage their healthcare expenses through HSAs can see significant benefits in employee morale, health, and company bottom line.

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