Health Savings Accounts (HSAs) might have launched 20 years ago, but there is still ample confusion about how they work and the benefits they impart to both employers and employees. Benefits brokers can help clear up this confusion by providing effective communication and resources that say the right thing, in the right way, at the right time.
In this post, we’ll give benefits brokers the tools to overcome the communication challenges inherent to a health insurance marketplace that is constantly changing. You’ll know how to talk about HSAs (hint: don’t refer to them by their acronym), how to talk to employers and the types of resources that can do a lot of the heavy lifting so that employees understand, enroll in, and adopt their benefits this open enrollment. Let’s get started.
What are the communication challenges?
When it comes time for employees to choose health insurance, there are a lot of products to choose from, especially supplemental savings and spending accounts, which can be pre- or post-tax, depending on the type of the account. To add to the confusion, some of the products have similar acronyms (e.g. HSA, FSA and HRA), and employees can often mistake one for the other.
So when benefits brokers are talking about Health Savings Accounts and other saving and spending accounts with their clients, one key point to make is to differentiate this type of account from others. You can also help ease open enrollment communications challenges by:
- Highlighting the rules and benefits of the account in simple language
- Speak to the concerns employers have
- Provide resources that can be an ongoing source of truth for employers and employees alike
Providing ongoing resources helps to ensure trust of, and engagement in the benefit account.
Reframe how you talk about Health Savings Accounts
To effectively communicate the value of an HSA, focus on the long term savings value of the account, the healthcare and tax savings associated with an HSA, and how an HSA can complement other flexible employee benefits.
Emphasize the long term savings
Instead of saying “it’s a more flexible FSA” or a “super-charged FSA,” describe an HSA like a “401(k) for healthcare.”
When explaining what an HSA is, many benefits and HR professionals can refer to it as a “more flexible FSA” or a “super-charged FSA”. But likening it to an Flexible Spending Account is discounting some attributes of the HSA that make it so valuable to employees and employers alike. Instead of using the FSA as a way to explain what an HSA does, try using the 401(k) as your reference.
The key difference between an FSA and an HSA is that HSAs are owned by the employee and the balance never expires. In addition, account holders are able to invest their HSA balance and those investments grow tax-free. Therefore, the long-term savings capabilities of the HSA and the ability to use it as a retirement account liken it to the way the 401(k) functions and contributes to the participant’s overall financial health. Referring to the HSA as a healthcare 401(k) is not only a more accurate depiction of how the account functions and the benefits it imparts, but it helps frame the account in users’ minds as a long-term savings vehicle.
Highlight healthcare savings and zero cost preventative care
Emphasize that High Deductible Health Plans cover 100% of preventative care, pre-deductible, and highlight key aspects of coverage, such as wellness checkups, vaccines, and prescriptions for chronic conditions.
Another aspect to the HSA that could benefit from a reframing is the High Deductible Health Plan (HDHP). Since enrollment in this type of health insurance plan is necessary in order to participate in the HSA, it can present a hurdle for employees because the amount of the deductible can make them nervous.
When talking about the HDHP combined with the HSA, highlight that a long list of preventative care is covered at 100% prior to the deductible being met. That means well visits, prescriptions for chronic conditions, vaccines, insulin, and more are covered with no out-of-pocket requirements under an HDHP. So employees can save their contributions for larger, big-ticket health expenses and save money on their monthly premiums at the same time.
Demonstrate the tax savings
Show how HSAs reduce employees’ and employers’ tax burden and adds money to employees’ pockets.
HSAs help both employees and employers save on taxes. When an employer offers an HSA and employees make pre-tax contributions, that lowers employees’ taxable income and the employers’ FICA tax burden. In addition, when employers offer an employee match, they can write off the matching funds as a business expense. To show employers how much they can save when they offer their employees an HSA and employer match, use our payroll tax savings calculator.
For employees, illustrate how they can add money to their pocket by reducing their tax burden when they contribute to an HSA and save on taxes with tax-free distributions now and in the future for qualified medical expenses. Use our HSA savings calculator to highlight just how much participants can save and the compounding effect of contributions made and saved over time, especially if participants invest their HSA balance.
Showcase how HSAs are part of a modern, flexible benefits package
Discuss how HSAs are compatible with other types of health and wellness accounts to drive more savings and engagement.
HSAs also complement a host of other benefit accounts like Lifestyle Spending Accounts (LSAs), Medical Travel Accounts (MTAs), and Limited Purpose and Dependent Care Flexible Spending Accounts (FSAs) to give employees a contemporary, competitive and flexible benefits package. All of these benefits give employees the purchasing power to spend their benefits money on the expenses that will have the greatest positive impact on their lives. The greater the positive impact, the healthier, more productive and more loyal these employees are likely to be.
Follow these best practices to communicate the value of HSAs
Now that we’ve talked about the “right thing” you should say, we’re going to address the “right way” and “right time” to say it.
1. Avoid use of jargon
Nothing turns an employee's eyes from focused to glazed faster than the use of words they don’t understand. But jargon isn’t just exclusive, it’s ineffective and it often fails to encapsulate exactly what something is or does. So when talking about HSAs, it’s better to use simple language to answer the “what” and the “how” questions about this account.
That means using the full benefit name: Health Savings Account either as much or more than you use the acronym. It also means instead of saying, “triple tax advantage” to refer to HSAs tax-favored status, explain the tax-related benefits in terms of how they function. For example, you could say, “You won’t pay taxes on the money you contribute to your health savings account and use to pay for qualified medical expenses.”
By using simple language you can help employees see HSAs as less complex and more user friendly. They are also more likely to feel comfortable signing on for this type of benefit and confident in their decision to do so.
To help break down complex terminology, share our Glossary of HSA and Health Insurance Terms with your clients and their employees.
2. Know your clients’ motives
Before you can create your sales collateral aimed at employers, you have to know what they’re looking for this year. Their concerns are meeting employees’ benefit needs while still containing costs. Inflation, employee turnover, supply chain disruptions and more are putting pressure on HR teams to provide more with fewer resources. In fact, 45% of employers surveyed by Aflac stated that offering a competitive benefits package was the biggest challenge they faced this year, yet a recent Lively survey of HR leaders found that 84% of organizations have improved benefits in the past 12 months to attract and retain employees.
In order to truly help employers achieve this goal, benefits brokers must help companies choose cost-effective benefits that will have a large impact on employees’ mental, physical and financial health. Benefits that are popular and benefits for which employees can realize positive effects immediately. HSAs fit this bill.
- HSAs help companies save money. HDHPs typically have the lowest premiums of the health insurance plans and when paired with HSAs can help companies save thousands of dollars in FICA taxes.
- HSAs help employees improve their financial, physical and mental health. They give employees a tax-free way to save and spend health care dollars and even save for retirement. This can lead to lower financial stress (thus improving their mental health), and better physical health because they both have a way to pay for the medical care they need, and are experiencing less stress so they’re less likely to have stress-related physical symptoms. This helps companies’ bottom lines because healthy employees are productive employees.
- HSAs (especially HSAs that can be invested) are popular benefits and offering them can help improve retention and recruitment efforts.
3. Help employers understand the benefits of mitigating employee stress
To focus employers’ attention on how HSAs help to mitigate employee stress and the benefits of doing so, using data can be hugely effective. Here are some statistics around the state of employee stress levels, how they are affecting employees’ health and productivity, and of course, the companies’ bottom lines.
- 47% of HR leaders say that employee stress around financial standing has increased.
- 92% of surveyed workers said it’s important to work for a company that values their emotional and psychological well being.
- 53% of employees say their financial stress interferes with their work.
- 83% say financial benefits are critical to their financial security.
- 80% of HR leaders say that competitive financial benefits are more important than last year.
In addition, financial stress can lead to deteriorating physical health and decreased productivity. Unfortunately, people with financial stress tend to avoid getting healthcare which leads to worse health outcomes and higher healthcare costs and lower productivity, absenteeism and turnover. In fact, a workforce with more financially stressed employees will see more sick days. This unscheduled absenteeism costs these companies, on average, $3,600/year per employee for hourly workers and $2,650/year per employee for salaried workers.
Conversely, employees that leverage financial benefits enjoyed a 4.5% reduction in healthcare costs. Companies that launched these initiatives experienced an ROI of between 100-300% on these programs.
4. Provide resources and work with a provider that makes HSA education easy
One way to ensure that employers and employees alike remain happy with (and engage with) their benefits, is to provide resources during open enrollment that clearly explain the positive attributes of their benefits, as well as resources they can access at any time.
Resources to provide during open enrollment can be brochures, a landing page for each benefit offering complete with an FAQ, and a digital tool that can help smooth out the open enrollment process. Other employee education services include town halls, AMAs and shorter communications via chat, text and email.
To provide ongoing resources, look for an HSA provider that offers easy-to-use tools and dashboards that enable employees to easily learn about and manage their HSA. This includes showing balances, total annual contributions made and how close they are to the annual contribution limit, and making it easy to change contribution amounts. Providers should also include resources like ongoing account holder education that explains how to use their accounts to fully realize their benefit.
5. Start small and set your clients and their employees up for success
For employees, the thought of building a large savings can be overwhelming to people, especially if they are starting with small contribution amounts. They might even feel as though “they’ll never get there” in terms of saving enough to pay for the deductible. Here are some strategies that your clients can use to help get them comfortable with opening an account.
- Offer a contribution calculator that shows the effects of compounding interest and investment of their contributions over time. This can give them a tangible picture of how small amounts saved add up over time.
- Encourage employers to contribute money to employees’ accounts. These contributions can be in the form of matching or a lump sum, but either way, employer-seeded accounts tend to perform better with employer contributions than those without. And not only do more employees adopt the HSA, they’re also more likely to contribute more money to their account if their employer also contributes.
Ways Lively can help
Lively offers a best-in-class HSA that helps employers offer a popular benefits package that can improve their bottom line. Our UI is simple, clean and easy to use, HSA account holders can choose from different investing options, or they can choose to keep their contributions in savings. We offer a debit card, industry-leading customer service and account holder support all year long and we take care of all employee onboarding and communication. Our goal is to make HSA administration seamless with employers’ current systems and easy for everyone involved. We also offer transparent pricing to make it easier for companies to stay within their budgets and for employees to keep more of their money.
Get started today!
Lively is your partner during open enrollment and beyond. If you’re looking to uplevel the benefits options you’re presenting to your clients, reach out today. We’ll help you provide a greater service to your current clients and win new clients so everyone succeeds.
Disclaimer: the content presented in this article are for informational purposes only, and is not, and must not be considered tax, investment, legal, accounting or financial planning advice, nor a recommendation as to a specific course of action. Investors should consult all available information, including fund prospectuses, and consult with appropriate tax, investment, accounting, legal, and accounting professionals, as appropriate, before making any investment or utilizing any financial planning strategy.