Helping your employees get started on the right foot with their HSA can make a big difference in the success of your benefits strategy. The following tips can help employees get the most out of their HSA plan:
Many employees may be unaware that their HSA-qualified health plan covers certain preventive care free of charge. Despite the fact that the Affordable Care Act included this as a major feature, employees may have questions. Under the ACA, health plans are required by law to cover certain preventive care and preventive medications for free (no deductible, co-insurance or copays).
Vaccinations, routine well-checks, and other preventive care are among the covered items. For a more complete list of services that are considered preventive, check with your health plan representative.
Become an empowered healthcare consumer
HSA-qualified health plans carry a higher deductible, which can cause your employees to think twice about how they spend their healthcare dollars. A couple of things might happen: Employees will shop for better prices on healthcare services or they will avoid care to save money. Employees need to understand how to be better consumers so that they get the care they need. There are a few ways employees can be smart about their spending:
Health care providers generally offer different levels of care from emergency services to urgent care to general care or even telemedicine. By selecting the appropriate level of care your employees can save money on out of pocket costs for medical expenses. Make sure to work with your health plan to clearly explain what services are available and appropriate for your employees.
When employees do need to go see a doctor, make sure they know to shop around. The same services can vary in price dramatically between providers. Cost comparison tools can help employees estimate how much a doctor visit will cost. Taking a retail example, when you buy just about anything in the marketplace, you check reviews online, comparison shop and find the best deal. These same savvy skills can be used in the healthcare space. Your employees can always ask for a lower price, the worst thing the doctor will say is no. Their doctor could unexpectedly recommend a test or procedure, all that they need to do is ask if it’s really needed. Who knows, there may be another cheaper option. They won’t know if they don’t ask. They may just get an honest dialogue with a healthcare professional, and that is an ally they want in their corner.
Health Savings Accounts
A health savings account (HSA) is one of the biggest advantages to having an HSA-qualified health plan. It is a tax-free savings account for qualified medical expenses. You and your employees can participate in these tax savings and fund the account through payroll for maximum tax advantages. Make sure your employees understand the benefits that their HSA has to offer:
Benefits of HSA
Taxes. You and your employees make contributions to the HSA on a pre-tax basis, they don’t pay taxes when they use HSA funds for qualified medical expenses. If they carry a balance in their HSA, those funds can be invested and the growth of those investments aren’t subject to tax either. That’s a triple tax advantage. There is no other savings account that has such favorable tax treatment.
HSA ownership. The money that you and your employee contribute to an HSA is theirs forever. It remains in the account and rolls over every year. It’s not tied to a health plan or insurance company. It is their money. Any funds not used for medical expenses can be saved and invested to pay for healthcare expenses when they retire. Ideally, you and your employees should make regular contributions to the HSA so that when they start getting medical bills they’ll be ready and able to pay them.
With consumer directed healthcare, your employees are empowered to make decisions based on what’s best for them. Being open and informed, asking questions, getting more involved in establishing a dialogue with healthcare professionals are a few of the cornerstones of consumer directed healthcare. Adjusting to a high deductible plan can seem difficult, but if you use the experience to help educate and empower your workforce, everyone may just be better because of it.
HealthEquity does not provide legal, tax, financial or medical advice.
HSAs are never taxed at a federal income tax level when used appropriately for qualified medical expenses. Also, most states recognize HSA funds as tax-free with very few exceptions. Please consult a tax advisor regarding your state’s specific rules.