3 tips to help employees understand FSA/HSA changes during open enrollment
Here's what benefits professionals can do to give employees a solid foundation of knowledge during open enrollment this year.
This year’s open enrollment period will be one for the books. Employees will be faced with a myriad of new benefit options, many of which originated as a result of the COVID-19 pandemic. However, as companies continue to extend their remote environments, some through the end of 2020, a large contingent of workers will be making these important decisions without the in-person support of their human resources teams.
That means employee communications and education has to take a front seat during open enrollment.
One benefit, in particular, that has seen significant change this year is tax-advantaged spending accounts. Health savings accounts (HSAs) and flexible spending accounts (FSAs) are an important tool for people of all ages and income levels because these benefits allow them to pay for out-of-pocket health care expenses — or save for expenses in retirement – with pre-tax income. More than 70 million Americans are currently enrolled in HSAs and FSAs, helping them get more value from their health care dollars and reduce their taxable income.
Related: Employees don’t know HSAs might also be used for retirement saving
Here are three things benefits professionals can do to give employees a solid foundation of knowledge during open enrollment this year.
1. Understand what’s different.
The amount of change and variables this year is mind-numbing. But understanding what’s new can have a meaningful impact on how individuals choose to allocate their benefits dollars. The passage of the CARES Act in March, for example, made two new product categories eligible for reimbursement with an FSA or HSA: over-the-counter (OTC) medicines and menstrual care products.
This change means account holders can buy pain relievers, allergy medications, skin care treatments, and much more without a prescription. In addition, for the first time ever, account holders can purchase tampons, pads, menstrual cups, period underwear, and liners with their FSA, helping people save thousands each year on these essential health products.
Understanding these changes will help employees who are considering an FSA or HSA make informed decisions about their anticipated health care needs and how much pre-tax money to set aside.
2. Keep track of ongoing guidance for benefit changes.
The COVID-19 pandemic has made both employee benefits and benefit changes pivotal for employees as the public health crisis surges on. This has triggered an evolution in health care needs and spending. For example, prevention is becoming a priority for more consumers and shopping for products to support everyday health and well-being is increasingly happening from the safety and comfort of home. And, because elective procedures and preventive screenings have been prohibited due to COVID-19 restrictions, employees may find themselves with extra money in their spending accounts. Meanwhile, financial pressures are driving home the ability of FSAs to help account holders spend and save their hard-earned dollars.
In response to this dynamic, the IRS earlier this year made the unprecedented decision to allow account holders to change their contribution amount, disenroll or enroll in an FSA, if their employer offered this option. This left many employers scrambling to create a special open enrollment period for FSA users, and as a result, just under half (47%) committed to some type of mid-year plan change (SHRM).
This IRS announcement is a clear example of why open enrollment isn’t just a once per year process. Employers need to be flexible and be prepared at any point in the calendar year to help employees maximize the potential of their benefits and give a helping hand to educate quickly when these changes occur.
3. Educate employees from a distance.
In-person education and enrollment are more challenging this year, as more than half of employees are still working remotely making large, in-person education sessions unadvisable. As a result, benefits professionals will need to find new tools and virtual options to educate employees and facilitate enrollment. In fact, an estimated 63% of employers say they plan to rely more strongly on online resources this year in response to COVID-19.
To support benefits professionals in this effort, Health-E Commerce, parent brand of FSAstore.com and HSAstore.com, has rolled out a new digital open enrollment tool that is free of charge to any employer or individual wanting to learn how an FSA or HSA works, which account is right for them, and how a spending account can help them make wise use of health care dollars. Consider offering this as a resource to help employees identify the best options for their circumstances.
There’s no question that this open enrollment period presents unique challenges, but it also presents opportunities to support employees when and how they need it most. Now is the perfect time to begin educating employees so they can get the most from their health benefits and their health care dollars.
Rachel Rouleau is the vice president of compliance for Health-E Commerce, the parent brand of FSAstore.com, HSAstore.com and WellDeservedHealth.com.
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