Open enrollment season is here, which means it’s time to review benefit selections and make any necessary modifications. Offering education to employees about benefit selections with individually tailored solutions is key to a successful enrollment season. One way to ensure employees are receiving the most accurate and helpful information available is to utilize new technology and data segmentation that can help drive informed decision making. When looking at employee benefit selections, examining how health savings accounts (HSAs) are utilized can help drive personalized solutions. Through targeted communications and personalized conversations, employers and benefit partners can help employees decide what their coverage needs are and help them make informed decisions.
By utilizing technology and segmentation data, employers can develop the foundational information needed to tailor benefit programs to best fit the needs of their employees. The first step in utilizing this data is to understand how employees are interacting with their HSAs. By examining trends in saving, spending and investing, employers can see aggregated monthly employee HSA activity such as spending trends or top occupations of HSA account holders. This can help better understand account holder behavior and spending trends. Benefit strategies can then be developed that influence and optimize employee health decisions. These tools can help unlock employee engagement and encourage employees to take an active analysis of their benefit selections.
Once an understanding of how employees are using their HSAs is established, developing and utilizing a benefits communication strategy is critical. By leveraging segmentation data, employers can develop targeted communications and campaigns to educate and assist their employees while providing them with the ability to maximize the benefits of their HSA contributions and balances. These communications cannot be created with a one size fits all approach. Creating communication materials that are useful and relevant to employees based on their individual needs will increase employee engagement and help to drive personalized conversations.
According to UMB Healthcare Services 2017 HSA Accountholder Overview, only 2 percent of HSA accountholders have funded investment accounts associated with their HSA. This could be due to a lack of education about investment options. Take the time during open enrollment season to ensure employees understand the benefits of investing in their financial future. Teach employees about the benefits that HSAs can have as long-term wealth planning strategies — particularly as health care in retirement is one of the most significant savings needs. Financial planning education is a key component to helping employees achieve financial wellness which can lead to a more productive and engaged workforce.
Health savings accounts
Health savings accounts (HSAs) continue to grow in popularity and yet, many are still unclear on how the accounts work. According to the 2017 Midyear Devenir HSA Research Report, the number of HSA accounts has risen 16 percent in the last year to over 21 million nationwide. It is important for employees to understand the potential triple tax advantages1 that an HSA offers. HSAs offer tax benefits1 at deposit, during the account’s life and upon withdrawal for qualified medical expenses – a triple tax advantage not seen with any other benefits or retirement account. Employees should also understand that money invested into an HSA can be rolled over from year-to-year—there is no “use it or lose it” clause such as with flexible spending accounts (FSAs). HSAs also can be used like traditional retirement accounts, with some working as simple savings accounts and others allowing employees to invest2 money in mutual funds, similar to a 401(k) or traditional IRA. Like other retirement accounts, some employers match contributions to an HSA. If this is the case, it is to the accountholder’s benefit to contribute at least the minimum to meet the employer match.
By utilizing segmentation tools, employers can determine if employees are contributing enough money to their HSAs and help them set specific goals to increase participation in investments. These efforts, along with a strong communication strategy, can help employees learn how to make the right decisions for their financial future.
Utilizing technology-driven segmentation data could be the key to unlocking employee engagement in open enrollment. Employers can effectively target and segment communications to drive employee outcomes and meet employees where they are at in their plan. The data can work to answer the most critical questions about employee HSA engagement and segment communication efforts to ultimately provide financial wellness and preparedness tools to employees.
1All mention of taxes is made in reference to federal tax law. States can choose to follow the federal tax-treatment guidelines for HSAs or establish their own; some states tax HSA contributions. Please check with your state’s tax laws to determine the tax treatment of HSA contributions, or consult your tax adviser.
Withdrawals for non-qualified medical expenses are subject to income taxes and a possible additional 20% penalty, if you’re under age 65.
2Investments in mutual funds, through HSA investment accounts are:
Not FDIC-Insured · May Lose Value · No Bank Guarantee.