Encouraging HSA Participation Contribution

How to Encourage Employees to Participate in (and Contribute to) HSAs This Open Enrollment

With higher out-of-pocket costs increasingly the norm in employer-sponsored health care, the health savings account (HSA) has become a crucial tool to help employees pay for the care they need while maintaining financial security.

Because HSA funds roll over, accumulate and can eventually earn interest tax-free, savvy employees have recognized the great potential of these accounts as retirement savings vehicles. Those who can afford it are even maxing out their HSAs to the annual contribution limits, which for 2019 are $3,500 for an individual and $7,000 for a family—up $50 and $100, respectively, from the 2018 caps.1

That said, very few employees are contributing the maximum amount to their HSAs. According to Benefitfocus' latest State of Employee Benefits report, the average employee contribution to an individual-coverage HSA for 2018 was a little over $1,400. That's less than 50 percent of the contribution limit for the year, and well below the average annual deductible amount for an HSA-eligible health plan. For the most part, it seems, employees aren't even saving enough to cover their anticipated medical costs for the year, much less set themselves up for retirement.

Some of the reason for this could just be limited incomes and the inability to afford further paycheck deductions. But some can almost certainly be attributed to other factors, such as lack of education and decision support around HSAs at open enrollment, which is the prime time for contribution elections.

At Benefitfocus, nearly two-thirds of our large employer customers offer an HSA. Based on our experience working with them to support their benefits communication and enrollment strategy, below are just a few best practices for encouraging employees to participate in and contribute to their HSAs.

As open enrollment season hits full swing, consider how well your current approach to HSAs accomplishes each of these:

Use clear language to emphasize key HSA advantages

There are many benefits that come from participating in an HSA. While that may be obvious to you, your employees may not be able to see it as easily.

Make sure that your communication and the materials you provide to educate employees on HSAs spells out the advantages in clear, concise language that the average Joe and Jane can understand without question.

Here are some examples of language you can use to clearly illustrate some of the key benefits of an HSA:

Portability

"Your HSA belongs completely to you, so your funds follow you wherever you go. Even if you change health plans, switch jobs or retire, your HSA goes with you. It’s yours for life."

Roll-Over

"There is no time limit on when to spend any of your HSA funds. At the end of each year, any dollars you haven't used stay in the account and roll over to the next year. You can let your account balance grow for long-term savings, and even invest some of the money to earn interest. Your HSA can eventually serve as an additional source of retirement income to help you pay for health care in your golden years."

Tax Benefits

"Money you put into your HSA is not subject to income tax, and you won't pay taxes on money you withdraw from your HSA for qualified medical expenses. And, if you invest some of your HSA funds, any interest that money earns is tax-free, so you keep 100 percent of the value of your HSA."

Offer real-world examples of how an HSA works

While it's certainly important for employees to understand the face value of an HSA, it's arguably more important for them to understand how they'd actually use their HSA in real life. By offering employees real-world examples for how an HSA works, you enable them to get a clearer picture of the personal value they can expect from participating in an HSA.

Present a few different scenarios in which an employee might experience various health care situations, from a trip to the pharmacy to a trip to the dentist to a trip to the emergency room, and explain how the employee could use their HSA in each of those scenarios. This helps to translate the HSA from concept to reality, leading employees to the "aha!" moment that can better inform their HSA participation and/or contribution decisions.

For this practice, as well as the one above, video can be a powerful tool to communicate the value of HSAs in a way that's engaging and relatable for employees.

Learn more about why video should be part of your open enrollment communications plan.

Make benefits enrollment easy and empowering

Even with strong communication around HSAs, a weak enrollment experience can keep employees from maximizing the value of these accounts.

Choosing whether to contribute to an HSA – and at what rate – can be a complicated decision, in which employees have to weigh their health care risk, financial objectives and other considerations. If your benefits enrollment system is difficult or confusing for employees to use, that decision only becomes more complicated.

On the other hand, intuitive and educational benefits enrollment technology can simplify the HSA decision-making process with features like:

  • Retail-like shopping experience that guides employees through enrollment with step-by-step navigation
  • Data-driven decision support tools that point employees to benefit plans that align with their individual circumstances 
  • Videos and other educational resources accessible within the enrollment experience, at the point of decision
  • Calculators to help employees determine the appropriate contribution rate based on their projected need and tax savings
  • Mobile app to enable enrollment and contribution decisions on the go, on any device

Ultimately, driving participation in and contribution to HSAs hinges on your ability to minimize the cognitive burden required for employees to make an informed decision about these accounts. That means communicating the value of HSAs in a way that's clear and relatable, and providing an enrollment experience that's both convenient and contextual.

Learn how Benefitfocus' HSA management solution helps employers maximize employee savings with minimal administrative effort.

 

1. SHRM: 2019 HSA Limits Rise, IRS Says