Why aren’t employees taking full advantage of the myriad benefits HSAs offer to savvy participants?
Because misinformation about how these accounts actually work is dominating the conversation. The many common distorted perceptions employees subscribe to regarding HSAs and high-deductible plans they’re linked to — The HSA is the same as an FSA or The HDHP is a low-quality plan — cause some eye-opening results. Case in point: 40-50% of HSA-eligible individuals don’t even have an HSA, according to David Lindgren, a compliance officer with the Flexible Benefit Service Corporation.
At the SHRM 2016 Conference & Exposition in Washington, D.C., Lindgren gave a detailed presentation on the critical role HR pros can play in getting employees to use their HSAs effectively.
The disappearing deductible
When it comes to getting employees to see the true value of their HSAs, the more specific you can be the better.
For example, employees have no doubt heard all about how the tax benefits of an HSA can save them money, but it’s another thing to actually show employees exactly how much money that is.
Using stats from the 2015 Employer Health Benefits Survey by KFF & HRET, Lindgren focused on how an HDHP with a fully funded HSA can nearly wipe out the high-deductible, the main objective most workers have to HDHPs in the first place.
How? First, consider an HDHP with a deductible of $2,196. That plan already saves participants $939 per year in premium costs (when using the stats from an average plan). Now, assuming the HSA attached to that plan is fully funded and garnering 25% in tax savings, employees would save another $837.50 annually.
So when you factor in those savings, employers are really only paying $419.50 more if they wind up having to satisfy the deductible.
How you can help
Granted, the bulk of employees don’t fully fund their HSAs. In fact, just 5% of HSA participants funded their accounts to the max, according to research by HelloWallet.
That’s why it’s so critical for employers to do more to help workers fully fund their accounts. Two ways Lindgren suggested employers can do this:
- Match employees HSA contributions (in a manner similar to the 401(k) match), or
- Offer wellness incentives in the form of HSA contributions.