From snoozer to hotshot: Mastering HSA education for maximum impact

Tale of the unused HSA: a benefits professional's guide to enlightenment

Your employee, Alex, sits down with you to review their medical plan options. They’re enrolled in the HDHP and when you mention the value of their HSA and ask how their savings are going, Alex looks at you confused. They’ve never accessed that account and just used the card until it stopped working.

How could Alex not understand the value of their HSA? Even though it’s their first year participating, they didn’t even choose to contribute themselves and they’re just spending the employer dollars. How can you help Alex connect with their HSA possibilities?

Begin with simple steps to activate Alex’s HSA potential:

1. Encourage contributions: Suggest that Alex considers contributing the difference between what they’re paying for their HDHP per pay period and the next highest cost plan. For example, if they’re paying $50 per pay period for the HDHP and would pay $75 for the preferred provider organization (PPO), recommend they contribute the $25 per pay period different to their HSA.
2. Educate on member responsibility: Help Alex and employees like them access information about their member responsibility for claims. Assist them in navigating their insurer’s website and reviewing their Explanation of Benefits (EOBs) to understand how much they’re likely spending on healthcare expenses.
3. Connect to the HSA account: Ensure Alex has accessed their HSA via their online and mobile app accounts. Seeing is believing and regularly reviewing the balance can motivate employees to do more.

Through taking these steps, you can guide Alex from confused spender to recognizing and harnessing their savings potential.

Right intent, wrong strategy

Up next, you have a talk with Taylor. Taylor has been actively contributing to the HSA for a few years now. You recall the time when Taylor made the switch from a PPO plan to a HDHP. It was a significant change and Taylor handled it with determination.

During your conversation, you mention that Taylor could serve as a great testimonial for the savings potential of an HSA. Taylor disagrees – they’ve got just about $1,000 saved up, which surprises you, since you know Taylor needs at least $2,000 in their cash balance to start investing.

Recognizing the opportunity to help Taylor see the long-term benefits of their HSA, you decide to dive deeper into the discussion. You want to make sure Taylor understands the strategies that can maximize their savings.

1. Balance the retirement strategy: Reassess the balance between the 401(k) and HSA contributions. While both are excellent savings vehicles, HSA contributions have the unique advantage of being withdrawn tax-free for medical expenses. By balancing the contributions, they can ensure they have funds available for unexpected medical costs while also participating in investments once they reach the cash threshold.
2. Post-tax payment for out-of-pocket expenses: Consider paying for smaller, regular expenses out-of-pocket and keeping those receipts. This way, they leave your HSA funds untouched, allowing them to grow. You can always use them to reimburse yourself from your HSA in the future if needed. This strategy helps the HSA balance grow faster.
3. Utilize a limited purpose FSA: If they have regular dental and vision expenses, a limited purpose Flexible Spending Account (FSA) can be a great tool. It allows you to pay for these specific expenses without dipping into the HSA, preserving those funds for other medical costs or future investments.

You can feel confident that armed with these strategies, Taylor will be able to maximize their HSA benefits and achieve their long-term financial goals.

A poster of HSA perfection: taking HSA savings to the limit

As the day winds down and you begin to fold up your tablecloth, along comes Kit. Kit is a staunch advocate of HSA accounts, always eager to explore new and exciting features for HSA account management. Kit has been diligently saving for years and is known for being the first to inquire about updates and enhancements.

As expected, Kit asks if the new HSA maximums for next year have been published yet. Seizing the opportunity, you remind Kit of a few key strategies to continue managing their HSA effectively:

1. Contribute to the maximum: Each year, the IRS publishes new contribution limits for HSAs. By contributing the maximum amount, they can reduce your taxable income for the year. This is a great way to maximize savings and take full advantage of the tax benefits.
2. Research brokerage account options: In addition to the standard investments, the HSA offers a brokerage account that unlocks thousands of additional investment options. This feature also allows for an investment advisor to manage your funds. If the standard investment list doesn’t meet their needs, consider exploring this option for greater flexibility and potential growth.
3. Reassess risk tolerance: It’s important to periodically reassess their risk tolerance, especially as they approach retirement. Use the educational tools available in your HSA account to ensure your investments are aligned with their current risk tolerance and financial goals.

Kit listens intently, appreciating the thoughtful reminders. You feel a sense of satisfaction as you wrap up the day, knowing you’ve helped another employee make the most of their HSA potential.