5 Reasons Why HSAs Are an Employer’s Dream Offering

1. They’re Cutting-Edge & Popular with Millennials

Since the passing of healthcare reform, many employers have moved to consumer directed health plans
to control premium costs while promoting smarter healthcare spending. Among the 2,400 companies
surveyed by benefits consultant Mercer in 2018, 68% said that they offer an CDHP, up from 59% in 2015.
By 2018, it is projected that three-quarters of U.S.-based companies will offer HDHPs.

With the adoption of the Affordable Care Act (ACA), many of our nation’s young
adults are opting for the higher deductible plans. According to the Kaiser Family
Foundation, enrollment in HSA qualified plans has increased over the past five
years, from 20% of covered workers in 2013 to 29% in 2018.

2. They’re Affordable & Portable

Health savings accounts, or HSAs, are available for people less than 65 years old with high-deductible
employer or individual health insurance coverage, including ACA plans. The plan must have a deductible
of $1,400 or more for an individual, and $2,800 or more for family coverage. What makes a
high-deductible plan more aractive is the premium. HDHPs typically see a premium percentage lower
than preferred provider organization (PPO) plans.

An HSA isn’t affected if an employee changes employers; his/her HSA follows him/her to the new employer.
Once the money is deposited in the account, the money is the employee’s to save, use, or invest. There is no
expiration date and the money can be passed on to beneficiaries upon death.

A common misconception is that a business must be a certain size to offer HSAs. As a low-cost alternative to help keep premiums under control, they are popular among individuals, small businesses, and larger employers.

3. They Increase Consumer Engagement & Control

It’s true: HSAs make employees feel like they can control and manage their money the way
they want to. Whether it be using an HSA for a prequalified medical expense or saving for
retirement, they decide how and when to spend it. Offering an HSA gives employers a great
opportunity to advise their employees on the best decisions for their wellness and financial
well-being.

Many employees are familiar with flexible spending accounts (FSAs) and how they work, so it is
important they understand the difference between an FSA and an HSA. Keep in mind the ‘use it or
lose it’ provision with FSAs. HSAs provide retirement options as well as the possibility of employer
contributions. Educating employees on the similarities and differences between an FSA and an HSA
will help increase their awareness and engagement in utilizing the account.

4. They’re an IRA in Disguise

Employees can contribute to their HSA and accrue interest just as they would an IRA. The triple tax
advantages of HSAs lead the pack for why HSAs are a great bet for investment dollars: Account
contributions are pre-tax or tax-deductible, and all earnings, interest, and investment returns are
tax-free. This is a great way to encourage employees to be financially strategic and healthy in their
decisions this enrollment season.

Funds from an existing IRA can even be rolled over into an HSA. This is a once-in-a-lifetime option, but one to possibly consider when looking at
the tax advantages of an HSA. The overall goal is to ensure the HSA complements their existing portfolio, including their 401(k).

5. They Drive “Stickiness” & Account Retention

It is common knowledge that it takes more time and resources to aract a new customer than it
does to retain a current one. That’s why it is more important now than ever to pay aention to your
existing customer base. Holding HSAs for employees tends to increase their “stickiness” and
decrease the chance that they will leave the company. The goal here is account retention.

A key employee benefit of an HSA over other types of accounts is that the money stays with the
employee. Once the money is deposited into their account, they own it. Employees can take an HSA
with them wherever they go and even if they change employers. Additionally, any money left over in
the HSA at the end of each year remains in the account and continues to roll over—tax deferred and
earning interest.