We get it. For your employees, being an active health care consumer and managing health savings accounts (HSAs) can be confusing, especially if utilization is infrequent. In fact, data from a Further study fielded in 2020 shows 40% of employees feel less than confident in understanding this benefit offering and how to fully leverage it.
In order to help employees fully understand their HSAs, HR teams can provide tutorials, which will undoubtedly up their teams’ knowledge and may even increase how often employees use their HSAs. The following are four strategies on how to shape a health savings account tutorial program for both new and seasoned HSA holders.
Start by covering the basics
Remind employees why they elected a Qualified Consumer Directed Health Plan (CDHP) with an HSA in the first place. Simply defined, a CDHP is a plan that offers lower monthly premiums in exchange for a higher deductible (the amount paid out of pocket before insurance kicks in). HSAs are paired with HDHPs and are a tax-advantaged savings account that can be used for medical expenses. HSA-eligible expenses, determined by the IRS, include:
- Health plan eligible expenses
- Vision and dental expenses
- Over-the-counter items
- COBRA premiums
- Medicare premiums (for people 65+)
- Long-term insurance
Work to eliminate fear associated with CDHPs
While consumer attitudes are shifting, fear of consumer directed health plans is still an issue. Four in 10 adults with employer coverage report that one of the biggest problems for their family is the medical bills they have to pay before meeting their deductible (31 percent)¹.
While the fear can’t be discounted, there is data that shows that 72% of healthy singles don’t generate enough annual medical expenses to exceed a $1,300 deductible, the IRS minimum deductible. Further, 38% of chronically ill singles will not exceed a $1,300 deductible². Bottom line: Fears can be minimized around higher deductible plans as most people do not typically reach the full deductible.
Even if they do, HSAs can be used to pay for health care expenses up to the deductible, providing substantial savings. For example, for every $100 set aside in an HSA, it is like spending only $70 due to its triple tax benefit. For high utilizers this is significant, in terms of tax benefits. For low utilizers, this just translates to more savings in their accounts.
Note: If paired with an FSA, your team members can use those funds for health care expenses until the full deductible is met, as a means to preserve HSA funds for future use.
The ins and outs of contributions
Employees can receive contributions to their HSAs through both payroll and manual contributions, at any time throughout the tax year to receive the tax benefits. These quick contribution tips and reminders below will be appreciated by your team members:
- HSA contributions can be increased, decreased or stopped at any time.
- HSA contributions can be made pre-tax or post-tax:
- If an HSA is set-up through an employer, employees can make pre-tax contributions through payroll deductions.
- Employees can also make contributions post-tax by setting up direct deposits to their HSA from their checking or savings account.
- Employees can have more than one HSA (their overall contribution limit does not change).
- If an employee and their spouse both have HSA-qualified plans, and one is a family plan, they can contribute up to the HSA family maximum, $7,200 in 2021.
- If an employee and their spouse are both covered under individual HSA-qualified plans, they can both contribute up to the individual maximum, $3,600 in 2021.
Provide tools and resources to help employees become active health care consumers
Employers can empower — and engage — their employees by educating them about their health care benefits, especially when it comes to navigating the health care industry and finding the right cost-effective care. Studies (and our own white paper on the subject) show that employees are trying to shop for care, but there’s still room for improvement.
According to a poll conducted by the LA Times and Kaiser Family Foundation, seven in 10 people with employer coverage reported engaging in some type of cost-conscious health care shopping behavior in the past 12 months, the most common of which is (and should be shared as an example to motivate your team members):
- Asking for a generic instead of a brand-name drug (47 percent).
Less common behaviors, and those that might actually lead to lower prices on services, include (again, please share):
- Shopping around different providers to find the best price for a medical service (17 percent)
- Trying to negotiate with a provider for a lower price (9 percent)³
Other examples include these optimization strategies:
- Using the preventive care portion of your plan, which is a covered benefit
- Evaluating ER needs, for other lower cost options
- Informing your doctor/provider you are on a HDHP, for suggestions on low-cost providers
- Shopping for medical value (i.e., low cost/high touch care)
- Using convenience or retail clinics and telemedicine
The good news is that these tips around maximizing HSA utilization, including consumerism and cost-conscious approaches to shopping for health care, will help employees to be more literate and confident health care consumers.
¹Kaiser Family Foundation/LA Times Survey Of Adults With Employer-Sponsored Insurance: https://www.kff.org/report-section/kaiser-family-foundation-la-times-survey-of-adults-with-employer-sponsored-insurance-section-2-affordability-of-health-care-and-insurance/
² Kaiser 2015 Employer Health Benefits Survey: http://kff.org/report-section/ehbs-2015-summary-of-findings
³ Kaiser Family Foundation/LA Times Survey Executive Summary: https://www.kff.org/report-section/kaiser-family-foundation-la-times-survey-of-adults-with-employer-sponsored-insurance-executive-summary/