10 minute read
3 Ways To Make HSAs The Choice For Employees
Workers may be confused about health savings accounts or may fear a large, unexpected expense. Here are ways employers and brokers can educate them.
By Amy O’Meara Chambers
Why aren’t more employees selecting health savings accounts? Many human resource teams work diligently with their benefit brokers to offer a thoughtfully crafted HSA with at least one of their health plan options, only to be disappointed in the final enrollment numbers. They are left scratching their heads when faced with lower-than-expected employee selection. When the HSA should be the clear winner compared to the traditional, more expensive health plan options, what more can an employer do to help employees shift to an HSA?
Most employers design an HSA offering in which the combination of an employee’s premium contribution for the high-deductible health plan plus any employer contributions to the HSA creates an offering for employees that is more attractive than the employer’s next best health plan choice.
A lower employee contribution for the HDHP premium will immediately grab the attention of most employees, and then most will calculate whether the annual savings in premium will cover the HDHP’s deductible exposure for the year. It is essential to consider your employee demographic as you create your financial package for the HSA, considering average family income as well as their financial and health care literacy. A “lower” employee contribution to premium should be relatively lower than other employee premiums associated with plans you offer and should consider this employee demographic.
If the 12 months of premium savings do not outweigh the higher-deductible liability and the HSA tax savings do not convince a worker to choose the HDHP with an HSA, an employer HSA contribution could help sway hesitant employees. Although the intent is not to have the combination of the lower worker premium and the employer contribution fully pay for all out-of-pocket costs for the worker, the HSA’s overall financial
package must look better than the employer’s next best plan offering and give the employee a reason to give the HSA a closer look.
Assuming worker contributions to the HSA premium are lower compared to your other health plan offerings and you’re already incenting workers with an employer HSA contribution, here are three additional ways to help nudge workers into a health plan that features an HSA. 1. Make the account-opening and contribution processes easy. Sometimes workers shy away from their employer’s HSA option because they are confused or don’t want to spend much effort opening an account. “Too much work,” they will argue. The good news is that the HSA industry has come a long way to make opening accounts easy, and the IRS allows employerplan sponsors to help streamline the account-opening and contribution processes without triggering regulatory issues. Employers can choose a single HSA provider for their workers. This comes with certain advantages: Employers can pay any HSA-related fees for workers. Employers also can establish cafeteria plans for workers to contribute to their HSA via payroll deduction (which allows
HSA Assets Approach $100 Billion Through First Half Of 2021
SOURCE: Devinir Research
In the first half of 2021:
• Total HSA assets reached $92.9 billion, a 26% increase year over year. • HSA dollars that are invested soared to $30.4 billion, up 73% year over year. • There are now over 31 million HSAs, a 6% increase year over year. • Almost $24 billion was contributed to HSAs.
employer and worker savings on FICA and FUTA taxes).
Employers also can help their workers maximize savings for future health care needs by selecting investment options offered by the HSA — and even match what is offered in their 401(k) — without placing the burden on the worker. An employer can create easy on-ramps for workers to open and contribute to their HSAs and help workers maximize their HSA investments. Employers should promote this ease during the enrollment process.
2. Personalize your education efforts. Sometimes a one-on-one session is all it takes to help someone on the bubble decide to opt in to a health plan with an HSA. Brokers can work with their employer clients to conduct one-on-one sessions during paid work time through Zoom or a private on-site area over a few days. Any broker with experience implementing HSAs has answered almost every possible question about them. Brokers
can inspire confidence in the program and help maintain the privacy required for workers to share their family’s financial and health circumstances to determine how an HSA might work for them.
Making it easy for employees, or their adult dependents, to quickly understand the advantages of an HSA can go a long way to encouraging enrollment in such plans. Additionally, if employer contributions to the HSA are part of the benefit offering, make sure enrollment education highlights the fact that these contributions can be saved or used in many ways today and in the future. Videos or meetings featuring employee testimonials and links to resources to help employees in their native language also may be helpful.
3. Provide access to funds. Not all employers can afford to make contributions to their workers’ HSAs in addition to bearing the cost
of sponsoring a health plan. For those that can, most brokers would agree that employer contributions move the needle on enrollment. For those employers that make no or low contributions to the HSA, it may be worth adding a financial security benefit to assist workers with payment and management of their out-of-pocket health care costs before they have funds in their HSA.
One common employee fear is that their family will experience a large-scale medical event early in the plan year that they didn’t anticipate and cannot afford — at least not without having additional time to save. Employees are rightfully fearful about how they will pay their share of a potentially large health care bill under an HDHP design.
The need for creative benefits to buffer employees from unexpected health care expenses has never been more important. New financial security benefit programs in the market complement HDHPs that allow employees additional time for repayment on consumer-friendly terms.
HSAs continue to carry the torch for consumerism. When individuals have greater financial skin in the game, they are more likely to be engaged in their own health care choices. This has a positive effect on long-term outcomes and overall spending. HSAs can be an excellent offering — superior to traditional health plan designs — for both employers and employees. It is worth the additional effort to make sure that employees understand the advantages of an HSA and that an employee’s transition to an HSA is as simple and as de-risked as possible.
Amy O’Meara Chambers is the cofounder and chief operating officer of HealthBridge. She is the author of HSAs For Dummies. Amy may be contacted at amy.chambers@innfeedback.com.
Your Place At The Top Is Waiting!
North American Insurance Services strives to provide agents with the tools they need to succeed. Our unique approach sets us apart — providing best-in-class products and in-house support, as well as practical training from elite producers. But don’t take our word for it — see what our top producers have to say!
“The growth I’ve seen with this company has been phenomenal.
There are always new opportunities and
training. There are not a lot of places that are willing to go out of their way to help you grow and build.”
– Kevin, Top Producer
“Their techniques for helping clients get coverage are like no other company I have seen. Andy’s amazing training and leadership
took me from ground zero to a six-figure
income in 2 years!”
– Jacquie, Top Producer
“I love the feeling of family at NAIS and the ability to
sell all carriers with
no limitations. The company’s innovative thinking is what keeps it a step ahead of the competition.”
– Mark, Top Producer
Visit SucceedWithNAIS.com for more information about what makes us different!
Financial facts and figures powered by AdvisorNews.com
Gen Z’s Finances Most Negatively Hit By Pandemic
Almost half of American workers said their financial situation has been negatively impacted GEN Z by the COVID-19 pandemic, but that impact STRUGGLES varies among the four generations who are in the workforce, according to the 21st Annual 50% of Gen Z workers are just getting Retirement Survey of Workers conducted by the by to cover basic Transamerica Center for Retirement Studies. living expenses.
More than one in four workers surveyed 35% of Gen Z work-
(43%) experienced one or more negative im- ers are paying off
pacts from the pandemic. Of these, 27% had student loans. their work hours reduced, 14% took a salary cut, SOURCE: Transamerica Center 10% were furloughed, 8% were laid off and 4% re- for Retirement Studies tired. Generation Z workers were the most likely to be affected, with 59% reporting a negative financial impact, while baby boomers were the least likely to be financially hurt by the pandemic (30%).
Only 24% of those surveyed said they are confident they will be able to fully retire with a comfortable lifestyle. Millennials (30%) are more likely to be “very” confident than boomers (21%), Generation X (19%) and Gen Z (16%). Sixteen percent of workers across generations indicate their retirement confidence declined as a result of the pandemic.
Investors Still Blindsided Despite Doing Right Things Which was worse for investors — the Great Recession of 2008-09 or the financial fallout of the COVID-19 pandemic? Nationwide found the Global Financial Crisis of 2008 had the greatest impact on investors.
Nationwide’s study of investors with assets of $100,000 or more found 37% of them were most impacted by the 2008 crisis while 28% said the pandemic crash and recession caused them the most financial harm.
Nearly two-thirds of investors (65%) are concerned about a bear market over the next 12 months, 61% anticipate market volatility will increase and 69% are concerned about a U.S. economic recession. It is also sobering to learn that just like last year, during the height of the pandemic, 85% of inves-
tors continue to say they can do all the right things to manage their
finances and still be blindsided by outside events.
Americans’ Priorities Out Of Sync With Retirement Planning
Americans’ top priority for retirement is maintaining a comfortable lifestyle. Yet most of them are not confident they will save enough to retire comfortably. Those were among the findings of Regions Bank’s latest retirement survey.
The survey found retirement confi-
dence varies by gender, with 39% of men feeling somewhat or very confident compared with 31% of women.
Confidence also varies by income, with only 20% of respondents who make under $40,000 annually reflecting confidence in their savings plans — and 32% who make DID YOU KNOW? between $40,000 The wealthiest and $80,000 reflect- 10% of U.S. ing confidence. citizens hold So what’s standing in the way of saving 89% of all U.S. stocks. for retirement? Daily SOURCE: Federal Reserve living expenses were cited as the biggest obstacle by almost half of those surveyed (45%).
This was followed by housing payments (34%), medical debt (24%), saving for other goals such as starting a family or buying a house (21%), and the financial impact of COVID-19 (20%).
US Retirement System Slips In Global Rankings
The U.S. retirement system barely cracked the Top 20 list of the world’s best, according to the annual Mercer CFA Institute Global Pension Index. Iceland’s retirement system was named the world’s best, with the Netherlands and Denmark taking second and third place, respectively.
The U.S. fell to 19th place, ranking behind Hong Kong but ahead of Uruguay.
The study found the gender pension gap to be especially wide, with women still facing retirement with much less saved in their pensions than men. Women also tend to have less time in the workforce compared with men, which ultimately means less time for accumulation of savings for retirement. Women also have longer life expectancies and are more likely to experience poverty in their old age than men; therefore, they require more capital through their retirement years.
