Health savings accounts (HSAs) are one of the most misunderstood and underutilized benefits in the workplace today but HR and finance professionals can help with just a bit of education for employees. As companies move more of the financial burden of medical benefits to employees just as they did with retirement, framing and education are key. A SHRM webinar delves into the problem offering some practical solutions.
HSAs are growing in popularity because companies want or need to offload more of the medical benefit costs to employees just as they did with retirement plans when they switched from defined benefit to defined contribution plans like 401ks and 403bs. More companies are shifting healthcare costs to employees moving to high deductible health care plans (HDHC) facing a 6% increase in healthcare costs in 2017 according to NBGH. For the first time ever, more than half of all workers will pay more than $1000 to cover a single person with the average deductible almost $1500. Overall, HDHC plans are offered at 83% of larger companies with about a third offering no other option.
To offset some of the burden, companies with HDHC plans also offer HSAs providing both tax benefits and flexibility. But the mistake employers make when introducing HSAs is to start by apologizing to employees about the HDHC plans. In fact, HDHC in combination with HSAs can be beneficial to some workers, especially healthier ones, and especially if the company offers a match.
HSAs can be more powerful than 401k plans because they offer triple tax benefits and some companies are shifting investments to mirror their retirement plan menu. HSAs also offer flexible spending and they are portable which is attractive to a younger, mobile workforce.
So proper framing, education and financial planning options can make HSAs, created to offset the financial burdens of HDHC plans, can turn what many think as a negative into a positive.