Article
From snoozer to hotshot: Mastering HSA education for maximum impact
Sep 05, 2024
It’s that time of year again – annual enrollment! As a seasoned benefits professional, you’ve set up an enrollment support table alongside your carrier vendors at an on-site benefits fair. Soon, an employee comes up to the table ready to talk to you about their high deductible health plan (HDHP) and health savings account (HSA) enrollment.
Putting your best benefits foot forward isn’t just about explaining the nitty-gritty details like deductibles versus copays, in network versus out of network providers or the labyrinth of prescription drug tiers. It’s about recognizing that each employee has their own unique experience and attitude toward their benefits. Each of your employees is in their own stage of learning and growing in their ability to save for their healthcare future.
This puts you in the perfect position to support your employees by understanding what phase they're in. As you aim to boost HSA participation and enhance your employees' appreciation and investment in their healthcare savings strategy for the long haul, consider this your golden opportunity to dive into the world of HSA personalities.
Get ready to help your employees take the next step in their HSA savings journey by meeting these diverse and dynamic personalities. Understanding these personas will empower you to guide them towards making the most of their HSAs.
The Snoozer
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:
- 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.
- 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.
- 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.
The Speedy Spender
From spending to savings: an HSA success story
It’s time to move on to your next employee waiting in line. Casey has had a whirlwind year with their family’s healthcare needs. They’ve been in your office quite a few times with questions about various healthcare expenses and how their HDHP will cover them. You’re eager to ask Casey how their HSA plan is working out.
Unfortunately, they’re running out of money all the time and are frustrated that they never have enough in their account to cover their bills. You know they’re actively contributing to the account, so you’re determined to help Casey plan for the next year and utilize their HSA more effectively, perhaps even saving a bit more for the future.
Here are some potential savings tips to transition Casey from a spender to a saver:
- Plan ahead for known procedures: Assist them in understanding how to plan in advance for upcoming known procedures and services. Recommend carrier tools and resources to ensure enough savings are going into the account ahead of time.
- Adjust contributions mid-year: Suggest that Casey use mid-year contribution changes to accelerate or decelerate the pace of contributions based on their expenses. This flexibility can help them manage their cash flow more effectively.
- Build a nest egg: Emphasize the potential of saving enough to build a nest egg for regular expenses their family incurs. Highlight how a well-funded HSA can provide peace of mind and financial stability.
By following these steps, you can guide Casey from feeling frustrated and financially strained to becoming a saver who maximizes the benefits of their HSA.
The Savings Slacker
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.
- 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.
- 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.
- 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.
The Savings Sprinter
Up, up and away: the right HSA savings trajectory
You’re thrilled with how these conversations are unfolding. You’ve provided valuable insights to the employees you’ve met with so far and it’s clear that your guidance is making a difference. Along comes Riley, who is relatively late to the HSA savings game, but eager to build long-term savings. Despite starting later, Riley has significant earnings potential, and you recently helped them set up automated investment sweeps.
You check in with Riley to see how the investment setup is going. Riley smiles and lets you know that it’s going pretty great and just as easy as you said to set up their investment choices.
You seize the opportunity to provide Riley with additional strategies to maximize their HSA benefits. There are a few more steps they can take to ensure they’re getting the most from the HSA:
- Monitor those investments: It’s important to stay engaged with the investments. Periodically adjusting investment choices and monitoring their performance through the convenient website or mobile app is important. This will help them stay motivated and ensure the investments are aligned with their financial goals.
- Make direct contributions: Considering making additional direct contributions if they come into extra money, like from a yard sale or a bonus at work. These contributions are tax-advantaged and can significantly boost the savings and account growth.
- Adjust for life changes: As their income and expenses change throughout the year, such as when they receive a pay increase, evaluate if some of that additional income can go into the HSA. Remember, HSA contributions can be adjusted year-round to keep up with lifestyle.
Riley listens intently, clearly absorbing the new information and admits they didn’t realize there was so much potential to keep advancing their HSA position. They are ready to embrace these recommendations and keep pace with their savings ambitions. With these strategies, Riley is well on their way to maximizing their HSA benefits and achieving their long-term financial goals.
The HSA Hotshot
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:
- 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.
- 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.
- 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.
Baker Tilly Vantagen
HR and benefits administration services
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