Teachers often plan a few weeks of catch-up lessons every fall. It’s a way to remind students what they learned last year but mostly forgot over summer vacation. HR professionals may want to consider that strategy as they plan for open enrollment because no matter how well you educated employees last year about the benefits you offer, including health savings accounts (HSAs) and flexible spending accounts (FSAs), they may have forgotten much of what they learned.
There’s also a good chance that, as employees are growing in their personal lives, they need reminders of how these benefits can continue to meet their needs. For example, an employee who elected benefits last year with no dependents may now be looking at welcoming a new child in 2025 and will want to set aside additional funds. Meanwhile, an employee who has greater health needs or who is planning for an elective procedure may need to be more diligent about budgeting how they will use their FSA or HSA funds.
In either case, HR teams are well served to treat open enrollment a bit like a brand-new school year. I find that employees are better prepared for a satisfying HSA and FSA experience when I first review the basics, revisit the highlights and remind them about the important tax advantages spending accounts offer. After that, I go beyond the basics with examples and one-on-one time to show employees how to access and use the helpful tools and technology that simplify these benefits.
More from this author: Concerned about employee wellbeing? 4 ways an FSA or HSA can help
Review the basics: How FSAs and HSAs differ
HSAs and FSAs both let employees set aside pre-tax payroll dollars to pay for healthcare costs. Withdrawals are also tax-free when used to cover qualified medical expenses. While HSA and FSA accounts both help pay for health-related expenses not covered by insurance, there are differences in contribution limits, investment options, portability and more. It’s not a one-plan-fits-all prospect; employees need to understand the nuances and differences in order to make the best decisions for themselves and their families.
Pro tip: I find that breaking open enrollment down into smaller units can be helpful. For example, it helps to tackle FSAs and HSAs with the medical plan overviews, and leave ancillary benefits (i.e., life insurance, short-term disability, long-term disability or critical illness) as separate sessions.
Flexible spending accounts
An FSA lets employees deduct a portion of their earnings on a pre-tax basis, which can then be used for qualified medical, dental and vision expenses. Whether it’s funding for a one-time spend, such as LASIK surgery, or ongoing expenses such as prescription co-pays or mental health counseling, employees gain in two ways:
- decreased taxable income and
- tax-free dollars to help cover thousands of expenses they would normally pay for out of pocket.
Despite these advantages, the fear of losing unused funds continues to be the biggest barrier to enrollment in FSAs. However, when HR educates employees about the broad eligibility and how they can use their funds, they become much more comfortable. A few resources and frequent reminders can help employees manage that fear. For example, an online calculator can help employees determine the right amount of money to withhold based on their needs. Account holders can also use online FSA resources to ensure important spending deadlines don’t slip by. Top this off by providing an easy-access link to a comprehensive list of eligible products and services that offers inspiration and insights for using FSA funds.
Pro tip: If your plan offers an FSA rollover or grace period, make sure to promote it during open enrollment and at year end so employees can manage their funds accordingly.
Health savings accounts
HSAs also help employees save for qualified medical expenses and provide tax advantages. They offer higher contribution limits and allow employees to carry forward fund balances year over year. Plus, HSA funds can be invested, providing a tax-free savings account for healthcare costs.
To be eligible for an HSA, participants must also be enrolled in a qualified high-deductible health plan (HDHP). Sometimes making the choice to move to an HDHP can be a barrier for employees because it’s something new and different. Walk them through the plan design and help them log into and navigate their health plan portal, show them where to review their claims histories and account balances, and help them see how the account and online tools put them in charge of their care. In short, take time to explain the pros and cons of these plan designs so employees can make choices that best suit their needs.
Pro tip: I try to provide several relatable real-life examples when I explain HSAs. In addition, I direct employees to resources like worksheets, calculators and other planning tools, and I offer to schedule one-on-one meetings with the employee and/or a family member who manages the health care expenses.
Communicate often and in a variety of ways
Healthcare spending accounts have been around for more than 40 years now. Yet, they can still feel confusing without education and support. To help employees get the most value from their FSA or HSA, provide simple and straightforward communication during open enrollment and throughout the plan year. Use all the tools available to you: email, intranet, posters or payroll stuffers, employee meetings and management messages. Include short reminders for coming deadlines or seasonal products and services. Highlight new or unusual ways to use pre-tax dollars. Direct employees to relevant tools and resources. In short, make it easy for employees and their families to use and fully enjoy the tax advantages and savings offered by spending accounts.
Also, remember that targeted, bite-sized pieces of communication are generally more palatable. I’ve found that if you offer HSA, FSA and LPFSA options, tailoring materials to each option individually to differentiate them can reduce confusion. Clear, concise and frequent messages are often more effective than a singular collection of text-heavy documents.
Pro tip: I like to leverage the technology in our benefits platform to make it easy for employees to get the information they need. We use our portal to serve up open enrollment, which offers capabilities such as tax calculators, lots of examples, tutorials and other tools for employees.
Helping employees choose and maximize the value of their benefits is an important role for HR professionals. But let’s face it: There are a lot of benefits, and each one includes specific rules, requirements and deadlines. It’s a lot to take in all at once. You can help employees make smart choices and boost overall engagement and satisfaction with an open enrollment education plan that meets them where they are at the start of each benefit year, and grows with them as they gain experience and confidence over time.
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