HSAs are on the Rise. Is Your Plan Taking Off?
Although enrollment in Health Savings Accounts continues to surge, many consumers are still unsure about the benefits and features of these plans. As an employer, you can have a positive impact on your bottom line (and that of your employees) by raising awareness about your company’s HSA plan this open enrollment season.
The Growth of HSAs
In the past six years, enrollment in HSAs has more than tripled, with a 29 percent increase in both the number of accounts and the total amount of HSA assets in the last year alone. The primary reasons for this growth is two-fold: First, the pairing of a High Deductible Health Plan (HDHP) with an HSA can create a significant cost savings for employers in the face of rising health care costs. This savings will also benefit employees, who frequently have a lower premium contribution under a HDHP.
Secondly, HSAs provide a significant tax advantage, as all contributions made to an HSA are tax exempt. As of 2013, employees were allowed to make contributions into their HSA in amounts up to $3,250 per year for an individual policy or $6,450 per year for a family policy. With no expiration date on when these funds can be used, this provides consumers with the ability to plan, save and pay for future medical costs – whether they’re incurred in two months or 20 years. Other factors contributing to the growth of HDHP/HSA plans include:
• An Improving Economy. While HSA contributions started to slump during the recent recession, employers have started increasing their HSA contributions over the last few years. This increase in contributions has encouraged employees to sign up for these plans and contribute themselves.
• The Affordable Care Act. With increased pressure on employers to provide affordable coverage to their employees, interest in HDHP/HSA healthcare plans is growing among employers who are trying to meet ACA mandates while watching their company’s bottom line.
Communicating the Benefits of an HSA
A recent survey found that 65 percent of consumers didn’t understand how HSAs work, with much of the confusion stemming from the differences between HSA and Flexible Spending Accounts. In fact, the vast majority of respondents incorrectly believed that HSA and FSA plans were the same, or that the “use it or lose it” provision of FSA plans applied to HSAs as well.
Make sure your employees understand the benefit of participating in your company’s HSA plan by providing them with clear, concise, easy to understand information that outlines the features and benefits of a Health Savings Account. Information to highlight includes the tax savings on all employer and employee contributions, the long-term, tax-free growth and the increased control over health care spending.
And while open enrollment season is a great time to get the conversation started, it shouldn’t end there. Regular communications about your company’s HSA is an important step in keeping employees engaged and educated about their health care options all year long.