If you offer Health Savings Accounts (HSAs), with or without high-deductible health plans, and your employees are not taking advantage of them, you are not alone.
According to a recent survey by Plan Sponsor Council of America1, half of employers offer HSAs as part of their benefits package, but 69 percent of employees are not clear on the benefits or uses of the HSA.
When asked why they aren’t enrolled in an HSA, employees responded by saying:
- I don’t see the benefit
- I don’t understand HSAs
- I don’t have the time to learn about HSAs
Unfortunately, even those employees who have an HSA don’t use them to their full advantage.
To address this problem, Enrich has created a new HSA course that helps employees understand what an HSA is and isn’t, the benefits of having an HSA, and the best ways to take advantage of their HSA account.
All of this will help employees manage their healthcare costs, which is a factor in overall employee financial wellness.
Understanding the HSA
The Enrich HSA course eliminates confusion about what an HSA is and what it does. Users will learn that an HSA:
- Is a savings account to be used for medical expenses
- Uses pre-tax dollars
- Helps lower healthcare costs
- Is not the same thing as a flexible spending account, so they do not have to use all the funds in a given year or lose them
- Allows employees to be in control of their healthcare spending
- Has benefits for both health employees and those with chronic medical problems
Explaining The Tax Advantages
The Enrich course also explains all the tax advantages of using an HSA. This is important because, as the Health Accounts Employee Attitude Survey2 shows, only 8 percent of employees get the full benefit of these tax advantages.
The course helps employees learn about the triple tax-saving benefits of an HSA:
- HSA contributions are pre-tax contributions, meaning employees will not pay payroll or income tax on those dollars
- Employees may invest the money in these accounts, and the subsequent growth is tax-free
- Withdrawals are not taxed if they are used for qualifying medical expenses
The course will also explain the W-2 differences and additional tax forms associated with an HSA and the information they’ll need to submit form 8889 to deduct their contributions on their income tax.
Explaining New Contribution Limits and Eligible Expenses
With the global pandemic, employees remain greatly concerned about their healthcare expenses and feel more confused now that new regulations have been imposed on HSAs. The Enrich course will help employees understand:
- The newest contribution limits3
- Permanent changes to eligible expenses due to the CARES Act, including over-the-counter medications and menstrual care products.
- Temporary changes to eligible expenses due to the CARES Act, including telemedicine costs and remote care before meeting deductibles.
- Chronic condition coverage before meeting deductibles for beta-blockers, blood pressure monitors, insulin, glucometers, and statins.
As employees come to understand and use employer-provided HSAs, everyone wins.
Employees have the opportunity to lower their healthcare costs while saving and investing tax-free. Employers reduce the administrative burden associated with other tax-advantaged accounts, save on FICA taxes and increase employee engagement in their benefits.
To learn more about the Enrich Financial Wellness Platform, watch our demo video.
1 - https://www.psca.org/research/HSA/2020report
2 - https://www.willistowerswatson.com/-/media/WTW/Insights/2019/01/how-well-do-employees-understand-and-engage-with-their-health-accounts-wtw.pdf
3 - https://www.irs.gov/pub/irs-drop/rp-20-32.pdf