Expanded HSA Eligibility Creates Need for Employee Education: 4 Critical Tips

Health savings accounts (HSAs) have become one of the most effective tools available to help employees manage healthcare costs while building long-term financial security. And thanks to recent legislative changes that make more people eligible to enroll in HSAs, employers and HR teams have a new opportunity — and need — to expand HSA eligibility education to their teams.

HSAs have always been a practical way to save money and pay for healthcare expenses, but the new rules, which make HSAs available for bronze and silver health plans on the Affordable Care Act marketplace, will go a long way to making HSAs more inclusive. That’s increasingly important given the changing dynamics of business and work today.

New Rules Create New HSA Eligibility Education Opportunity

The triple tax advantage and year-over-year flexibility of HSAs allow individuals to pay for current medical expenses and set aside savings for future needs, including healthcare costs in retirement. Yet despite their value, the fact that eligibility has historically been tied to enrollment in a qualifying high-deductible health plan created an unintended barrier to HSA adoption.

Regardless of the size of your organization or your health coverage — self-insured, fully insured group, ICHRA, marketplace or other — the new eligibility rules create an opportunity for HR teams to educate and engage a new class of employees in health and financial benefits.

Whether your organization is new to HSAs or if this tax-free account is a staple in your benefits package, here are four things HR teams and employers should reinforce about HSAs to help employees maximize their account during the remainder of the year:

1. Flexibility

HSA funding is highly flexible. Employees are not required to fully fund their accounts to see value. For example, some may choose to contribute enough to cover only expected expenses for the current year or an immediate healthcare need, while others may contribute the maximum amount in an attempt to prepare for retirement.

Be sure employees understand that they do not have to contribute the maximum amount and that they can fund the account whenever they want, throughout the year. HSA contributions can be made by the employee, the employer, or another individual, such as a spouse or family member.

2. Ownership

HSA funds always belong to the employee. Unlike flexible spending accounts, HSA balances roll over from year to year and remain with employees even if they change jobs or relocate. This portability reinforces the value of HSAs as a long-term financial tool.

3. Financial Gains

HSAs provide a rare combination of immediate and long-term financial gain. HSA contributions reduce taxable income, account balances grow tax-free, and withdrawals for qualified medical expenses are also tax-free.

Encourage employees to use free HSA calculators to estimate tax savings, compare HSA investments to 401(k) performance, and gauge potential future savings when they participate in an HSA.

4. Broadness

HSA eligibility is broader than most people realize. One of the main reasons employees don’t enroll in benefits like the HSA is because they don’t fully understand how they work and how they can be used.

HR teams should help employees understand that HSA funds can be used to cover clinical services, telehealth services, and a wide range of everyday healthcare products. In fact, according to estimates from Health-E Commerce, the average household spends $1,600 on everyday healthcare items that could be purchased with tax-free HSA funds. Encourage employees to use a comprehensive, searchable eligibility list to explore products and services that can enhance and support their health now, and in the future.

Help Employees Achieve Goals

Trend reports continue to indicate that employees want and expect their employers to provide financial wellness support and benefits, and with the recent changes in HSA eligibility, these tax-free accounts are poised to play a bigger role than ever in helping employees navigate these goals. Fortunately, with just a small investment in employee education, HR teams can help employees achieve their health and financial goals now, and in retirement.