Educate employees about unique HSA features

Striking the right balance between using your HSA for saving and/or spending on your medical expenses is vital to getting the most out of the account. But, regardless of an employee's individual situation, there are some key account features that employers can help employees understand.

Contribution limits: HSA limits are scheduled to increase to $3,450 for individuals and $6,900 for families starting in 2018. Tools like online calculators can help employees estimate current tax savings and the future value of contributions so they are better prepared to strike the proper balance for their individual situations. Employers should look for opportunities to make these tools and educational information easily accessible throughout the calendar year, not just during open enrollment.
Eligibility: Medical product and service eligibility is determined by the Internal Revenue Service (IRS), which states that medical care is amounts paid for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for affecting any structure or function of the body. This is a very broad definition, but employers can make it simple by providing an Eligibility List for employees to check before spending HSA dollars.
Dependents: Exactly who can be covered by an HSA is a common question among employees. Because HSAs are tax-advantaged accounts, coverage is limited to individuals (spouse or relative) whom the HSA holder claims on their tax return, including spouses, as well as children and adults listed as tax dependents.
Benefits when paired with other accounts: HSAs are considered a form of "first-dollar coverage," which means that the account can pay for your covered services before you meet your deductible. Qualified HDHP plans often come with not only out-of-pocket deductible expenses, but co-pays and co-insurance too. Your HSA can be used to cover these costs. As such, HSAs cannot be combined with first dollar options like general medical flexible spending accounts (FSAs) or health reimbursement arrangements (HRAs). However, an HSA can be used with a limited care flexible spending account (LCFSA) to cover vision/dental expenses or a dependent care flexible spending account (DCFSA) that can supplement child care/elderly dependent care. Employers should be clear about which options are offered to their employees, and the compatibility requirements of each.
Investment options: Employers will often partner with a specific HSA administrator to simplify the enrollment process for employees, but it's important for employees to understand that they have options when opening an HSA. Not all HSA administrators offer an investment platform for the account. Employers should also make employees aware that any interest, dividends or capital gains earned from an HSA are non-taxable. Last but not least, HSA funds are portable, so an employee can move these funds from one job and continue funding it at another position.

Instant Insights /

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