For many people, Health Savings Accounts (HSA) with High Deductible Health Plans (HDHP) are the absolute best option for health insurance. But because they have a few more moving parts than more traditional plans, business owners often tell me they don’t want to offer them to employees. “They won’t understand it,” the leaders say.
First, I have to point out that that’s a form of discrimination in and of itself, and a terrible statement about how you perceive your employees and their ability to learn. But that aside, they will understand it, if you have someone come in who knows how to explain it to them. For example, we’ve seen a jump in one year from five percent of employees signing up for HSAs to 27 percent. And the only difference was that we encouraged the Chief Operating Officer to hold enrollment meetings, answer employees’ questions, and explain how HSAs work.
The reason the COO was so willing to do this, besides wanting to help employees, was that HSAs can save companies a lot of money. The employer does not have to administer the plan, and often has to put a lot less money into the plan. This can be offset initially, since many employers decide to get employees started with a contribution to their health savings account. But it still can save them a significant amount of money in the long run, due to reduced premium amounts.
Employees have certain concerns about how HSAs work. But with a little education, they can see how these plans benefit them as well as their companies. Here are some examples from Employee Benefits News:
- It’s not use it or lose it. Employees often confuse HSAs with FSAs or Flexible Spending Accounts. With an FSA, you either use the money by the end of the year, or you lose it. That’s NOT the case with HSAs. It’s the employee’s money. Even if they leave and go to another company, it’s still theirs.
- It’s pre-tax money. Employee contributions reduce their amount of income and consequently their tax burden.
- Employees choose how much they want to contribute each pay period up to a limit, and it’s automatically deducted. Employers can contribute to make sure employees reach the limit, if they want.
- Employees are in control. They decide how and when to use the money in the account without having to double check with employers or insurers. However, if employees pay for non-medical expenses out of the account they will be taxed on that money.
The point is, the days of paternalistic employment where a few people in the C-suite make benefit decisions for everyone else in the company are passing away. Empowering employees with the knowledge to make the best decisions for their own families and situations is the most responsible decision an employer can make. If you are concerned about their understanding, you simply hire an expert who can walk employees through various scenarios to help them make their choices. It’s crucial to hire grownups and treat them like grownups. Offering the chance for people to choose their own benefits is a good start. And if you want help finding people to educate you and your employees, call us!
