Following Up on HSAs After Open Enrollment

Educating employees about health savings accounts can help them maximize their benefit.

“The best time to engage with employees and educate them about health savings accounts is after open enrollment,” says Steve Neeleman, founder and vice chairman of HealthEquity in Draper, Utah.

The 2019 Bank of America Workplace Benefits Report found 57% of employees say they have a good understanding of health savings accounts (HSAs). However, only 11% of employees were able to correctly identify four basic attributes of HSAs—they offer a “triple” tax advantage, funds in the account can be invested, funds in the account do not expire, and having an HSA requires enrollment in an HDHP.

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Lisa Margeson, head of Retirement Client Experience and Communications at Bank of America in Boston, notes that before educating employees, employers themselves have to make sure they are educated about HSAs. The same report shows 65% of employers say they have a good understanding of HSAs, while only 7% correctly identified the four basic attributes.

The Employee Benefit Research Institute (EBRI) reports that one-half of HSA owners contributed to their account in 2018, but 37% of HSAs did not receive any contributions (individual or employer) in 2018.

Margeson suggests plan sponsors focus on two key messages: the cost of health care continues to grow significantly, and the tax advantages of HSAs. “With those two complementary messages, we have seen a good pickup in the enrollment in HSAs,” she says.

“Talk about savings and investing, most people see them as like [flexible spending accounts],” Neeleman says. “Start with three basic messages: HSAs are not use it or lose it accounts, they can be invested and employees can increase how much they put into the account during the year. Light bulbs will go on.”

Margeson notes that HSAs are unlike any other employee benefit when it comes to tax advantages. “Employees’ money goes in pre-tax, grows tax-free and, if pulled out for qualified medical expenses, is tax-free as well. No other savings vehicle gives you that,” she says.

Neeleman says not only will an HSA participant save roughly 8% by avoiding FICA taxes, but the employer will save the same percent. “So, it is important to tell employees to fund their HSAs to take advantage of the tax benefits,” he says, noting that California and New Jersey are exceptions.

Most of the time, however, employees enroll in an HSA as they do with a retirement plan—establishing an amount to be deducted from payroll to put into their account, Margeson points out. Employees need to understand, though, that they can only use HSA funds after they are put into the account; they are not like flexible spending accounts (FSAs), with which the full balance employees elect is available before it is funded.

According to Neeleman, most employers allow HSA participants to change the amount deferred into their accounts during the year. They may only allow participants to do so quarterly or at some regular interval. This way employees can save more if they have a change in medical cost needs, for example, if they have a baby.

Margeson notes that most HSA providers send a welcome package informing participants about the account website and how to sign on and take advantage of the tools, resources and education to manage their accounts. But, Neeleman suggests employers that share messages and education early and often help employees have the most success with their HSAs. “A few months out from open enrollment, hold webinars and/or lunch and learns about the ways participants can use their accounts,” he says.

Since the accounts are not “use-it-or-lose-it,” both Margeson and Neeleman say education about saving and investing HSA accounts for retirement is also important. “Out-of-pocket health care costs continue to rise and will be significant in retirement. Employees can make an intentional decision to not use HSA savings for current medical expenses, if they can afford it, and save and invest their money for future use,” Margeson says.

A report from Devenir says those who invest their HSA accounts have an average total balance six times larger than those who don’t.

Sometimes HSA investment providers only allow employees to invest their funds once they reach a certain amount of savings, Margeson points out. She says that’s why it’s important for employers to educate employees during the year so they will know when they can invest and how to do so.

“Employees may first consider their current health care needs then realize an HSA is incredible savings vehicle for retirement health care expenses. Ask them, ‘Why not maximize HSA contributions if you can?’” Neeleman says. He points out that the IRS allows catch-up contributions to HSAs of $1,000 each for the employee and his spouse after age 55.

“I always believe the icing on the cake with education is to remind people that the longer they keep the money in their HSA, the better it can grow,” Neeleman says. “If an employee can pay for a current medical expense with post-tax dollars, he can leave money in his HSA to grow, and in the future, he can reimburse himself tax-free. There’s no statute of limitations on those reimbursements.”

Margeson says, “When we educate employees about [using HSAs for retirement savings] we actually see an uptick in employees saving their funds for the future versus using them today. Across the industry, about 70% pull money out of HSAs for near-term expenses. Among our client base, it’s about 60%.”

SURVEY SAYS: Favorite Holiday Movie 2019

PLANSPONSOR NewsDash readers share what is their favorite holiday movie.

Last week, I asked NewsDash readers, “What is your favorite holiday movie?”

The following listed movies did not receive any votes:

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  • A Diva’s Christmas Carol
  • An American Christmas Carol
  • Bad Santa
  • Bernard and the Genie
  • Christmas in Connecticut
  • Prancer
  • The Hebrew Hammer
  • The Holiday
  • The Little Drummer Boy
  • The Year Without a Santa Claus
  • We’re No Angels

The following movies received less than 3% of votes:

  • Frosty the Snowman
  • Home Alone
  • How the Grinch Stole Christmas
  • Love Actually
  • Planes, Trains and Automobiles
  • Scrooged
  • The Bishop’s Wife
  • The Polar Express
  • The Ref
  • The Santa Claus

Die Hard, Holiday Inn, Miracle on 34th Street and Rudolph the Red Nosed Reindeer each received 4.8% of votes. Fifth place goes to Elf, with 5.9% of readers selecting it as their favorite holiday movie.

A Charlie Brown Christmas and White Christmas tied for fourth place, receiving 7.1% of votes. A Christmas Story and Christmas Vacation, with 8.3% of readers selecting each, tied for the third spot. And No. 2 goes to A Christmas Carol, at 10.7%.

And, once again, the No. 1 holiday movie selected by NewsDash readers is It’s a Wonderful Life, which received 15.5% of votes.

More than four in 10 responding readers (42.7%) indicated their vote did not change since the 2017 survey, while 3.7% did change their choice. Nearly one-quarter (23.2%) don’t remember which movie they voted for in 2017, and 30.5% did not participate in the survey that year.

A big thank you to all who participated in our survey!

Verbatim

I have to watch it every year!!!!

For goodness sake, please don’t ever include, or do a survey on, favorite Hallmark movie or we will all miss Christmas because we’ll still be scrolling through the endless list!

When will we stop considering Die Hard a Christmas movie – it is ridiculous.

October is nothing but horror movies and December is nothing but Christmas movies. It keeps the world spinning.

I love them all and watch them all. I still debate my husband on whether Die Hard is a Christmas movie…

Holiday movies are great because they divert my attention from all the bad news in the world, and I don’t have to listen to campaign ads by politicians slamming each other!

My second choice is “Die Hard”, which certainly is a Christmas movie despite what some may think.

I had no idea there were holiday movies other than “It’s a Wonderful Life.”

I watch as many as I can fit in. Especially while wrapping presents and baking.

Die Hard is not a Christmas movie. Sorry guys

My guilty pleasure is the plethora of Hallmark Christmas movies

Gotta go with the classic A Christmas Carol, but so many close seconds!

Holiday movies help me shift my mood from grumpy & stressed to grateful & happy.

I chose Christmas Vacation, but A Charlie Brown Christmas is a very close second.

I prefer the ones that get to the spirit behind Christmas. There are really about 5 that I could choose as my favorite – impossible to pick just one!

It’s not Christmas until Linus drops his blanket. I have watched Charlie Brown’s Christmas every year since it was first broadcast.

Depending on the audience, “Elf” & “Christmas Vacation” are perfect with the kids and family; I selected “Love Actually” as that’s the choice for me and the Mrs.

At some point in the holidays you just need to put on your most comfy pjs, have a bowl of buttery popcorn, cuddle under the quilt with your honey, and watch an old favorite that brings happy memories. Helps to curb the insanity for a couple of hours.

I love the George C. Scott version the best.

Even the grinchiest Grinch has to love a feel good holiday movie from time to time. It’s a time to sip hot chocolate and eat fresh from the oven cookies while enjoying your favorite movies!

I love Christmas movies! If you really aren’t feeling in the spirit, they most certainly help you change your attitude (usually)!

There really are waaaay toooo many to choose from. All of the cartoons are great with the exception of Frosty Returns but you must agree because it’s not on the list!!! 🙂

I’m 60 years old and for the first time in my life I saw the ENTIRE “It’s a Wonderful Life” movie over the weekend! Also, it appears I am missing out on a lot of great Hallmark movies by not having cable. Bummer.

It’s nice that there are so many good movies for any mood.

It’s not Christmas in our house unless the Christmas Story is playing in the background while we are opening presents.

In general, they’re trite, and they suck.

 

NOTE: Responses reflect the opinions of individual readers and not necessarily the stance of Institutional Shareholder Services (ISS) or its affiliates.

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