While many employees have stated that their overall health has become more important in the wake of COVID-19, the reality is that, for most Americans, preventive care has all but stopped since the pandemic began. From annual well-care visits to vaccinations, dental appointments, and mental health sessions, proactive care services are critical for maintaining good health and avoiding more serious health issues and high costs in the future.
Part of the challenge in getting employees to take the initiative is that they lack an understanding about what HDHPs and HSAs can do for them. The good news is that now, more than ever, there is immense opportunity for employers to educate employees and provide resources to empower them to be good stewards of their health. To help you get started, we’ve highlighted some common misconceptions about HSAs and how you can address them.
I'll open an account when I need it
Why wait? All HSA-qualified plans include preventive care – routine physicals with a doctor, immunizations, and cancer screenings do not count against deductible, so you can keep saving your HSA funds for other medical expenses. Also, if you open and contribute regularly to an HSA, you can save enough to meet the plan’s deductible. Then, if the unthinkable happens and you experience a catastrophic health issue, you’ll have peace of mind that the deductible can easily be paid and will be followed by insurance coverage. And remember, service incurred before an account is open are not eligible expenses.
It's going to cost me more than traditional insurance
There are many ways in which engagement in an HDHP coupled with an HSA will actually save employees money. Share with them that, for every dollar they contribute to their HSA, they will get another 30 cents due to the HSA triple-tax benefit:
- Reduce taxable income - HSA contributions through payroll are made pre-tax, which lowers tax liability on paychecks. Manual contributions are tax deductible when filing taxes each year.
- Tax-free earnings - Interest growth earned on HSA funds is never taxed.
- Tax-free distributions - HSA funds are not taxed when used for eligible expenses.
Even if your employees put money in today and spend it tomorrow, they’ll still save money on taxes, no matter what their income is.
An HSA is equivalent to having no insurance coverage
Reassure your employees that switching to an HSA doesn’t mean they lose health coverage or have to change health care providers. The insurance is the same – once the yearly deductible is met, coverage kicks in. Members still reap the benefits of their health insurance carriers discounted rates on medical and pharmacy services and are able to enjoy the most straight forward insurance plan out there. All services (except preventative) are subject to your deductible, and you can use your HSA balance to pay for those expenses.
An HSA won't pay for what I need
As mentioned above, all HSA plans include preventive care. What’s more, many people aren’t aware of the breadth of health care services and equipment that also can be paid for with their HSA dollars. From aspirin to counseling, x-rays and lab tests, to physical checkups and dental cleanings the number of eligible items can be truly surprising to some. In some situations, you can even use HSA funds to pay for insurance premiums and for items that aren’t covered in a traditional insurance plan.
You must use an HSA for every medical expense. And if you don't use it, you'll lose it.
HSAs are not like Flexible Spending Accounts (FSAs), where account holders do have to spend what they save every year. With HSAs, it’s up to each individual account holder to decide when to reimburse themselves for health care expenses. There’s no time limit. Just make sure to keep receipts or upload them online for safekeeping.
If you save your HSA funds for years, the tax-deferred growth and savings could multiply considerably.
On the other hand, if you’re running low on HSA funds, you can still save receipts and documentation, then reimburse yourself later when your HSA is replenished. As long as you had an HSA when an expense occurred, you can use those funds later to reimburse yourself.
Employers - take advantage of today's unique opportunity to communicate with your employees
While the COVID-19 pandemic has brought about significant challenges, it actually opens up an opportunity to have a productive dialogue with employees about their health care and how best to save and spend funds in their employer-sponsored HSAs. In fact, it’s more important now than ever for employers to educate employees on how to shop for the right care – including preventive care – at the right price for them. Not only can you empower employees to navigate open enrollment confidently, you can increase employee adoption of benefits and, ultimately, create healthier employee populations.