Sell employees on benefits of HDHP/HSAs
As you evaluate your health insurance options for the upcoming benefits year, you may be considering whether to offer high-deductible health plans, coupled with health savings accounts. HDHP/HSAs are a combination that can save big bucks for employers and employees alike.
However, many employees balk when they get a look at those high deductibles. HSAs are meant to ease that anxiety, but that only works if employees know how to use them effectively.
To pitch an HDHP/HSA plan, be prepared to explain to employees exactly how it works.
HSAs are tax-advantaged accounts that employees can use to pay for eligible medical expenses, such as deductibles, copays and coinsurance. (HSAs can’t be used to pay premiums.) Employees may make pretax contributions into HSAs, which employers can match (see “IRS releases 2019 inflation adjustments for HDHP/HSAs”).
Unlike health flexible spending accounts, there is no use-it-or-lose-it requirement built into HSAs; unused funds roll over from year to year. Employees will like hearing that, so stress that particular feature.
Also, HSAs are portable if employees leave your employment. Some HSAs offer the ability to invest in mutual funds or exchange traded funds, which could make employees’ balances grow faster.
Although HSAs must be paired with an HDHP, employees who later opt out of the HDHP can still hold and spend the money they’ve already contributed into their HSAs.
As you shop around for the best HSA provider, consider the following features:
Ease of access: Some HSAs allow employees to pay for qualified expenses directly using a linked debit card or online bill payment system. Others require paying eligible expenses out of pocket and then requesting reimbursement.
Account maintenance fees: Some HSAs charge monthly account maintenance fees. Others may waive fees for employees with sufficiently high balances.
Interest: Some HSAs pay interest on funds employees don’t spend immediately.