How technology can help employers increase HSA & FSA adoption

Open enrollment is on the horizon and U.S. employers’ health benefits costs are expected to increase to nearly 8% for 2025, the highest amount in more than a decade, according to a new survey by Business Group on Health. These rising costs come at a time when more than one-third of Americans are living paycheck-to-paycheck, so it is important during this enrollment period to help employees navigate health plan options that will offer cost-savings.

Consumer directed benefits like health savings accounts (HSAs) and flexible spending accounts (FSAs) offer employees a compelling way to access affordable healthcare, while also benefiting from pre-tax savings. And, with HSAs and FSAs, employees could save nearly 30% in taxes—a combination of federal income, FICA and potentially state income taxes—on every dollar contributed via payroll deductions.

Health account complexities erode account usage

Many eligible employees, however, opt not to take advantage of these benefits because of negative past experiences. The inconvenience of manual receipt uploads of receipts and long wait times for reimbursements often deter employees from engaging. Only about one-third of eligible workers enroll in high deductible plans with HSA or health reimbursement arrangement (HRA) savings options. To top it off, over half of Americans with FSAs are forfeiting unused contributions at the end of the year.

With HSAs, another barrier to adoption is the Customer Identification Program (CIP) process, required by the USA PATRIOT Act when opening an HSA. While only 10% of employees fail the CIP on the first review, those who do—along with their employers—face an intensive, time-consuming amount of paperwork that will delay access to their HSA funds.

Rife with complicated rules and a lot of paperwork, these processes are in desperate need of modernization. With the help of technology—from artificial intelligence (AI) to automation—health benefits can become more accessible to all employees, with the added bonus of streamlining the behind-the-scenes work required by HR professionals.

4 ways to drive adoption of HSAs and FSAs

New technology, such as AI and automation that helps employees and employers manage these benefits accounts, are being introduced to address traditional pain points. Here are four ways to improve employee satisfaction and increase adoption of consumer health accounts:

• Instant Clams Approval – AI-enabled processing can eliminate lengthy claim forms and waiting periods. AI provides consistent claim determinations and instant processing, avoiding the typical delays.

• Instant Payments – Look for technology that can issue reimbursements immediately, through popular consumer-friendly apps, like PayPal and Venmo, as well as debit card pushes. This eliminates the need to cut and mail checks, or wait multiple days for transfers of funds.

• Real-Time Coaching – To eliminate uncertainty about what products or services are eligible or whether documentation will be approved, offer solutions that provide immediate feedback and personal guidance through the claims submission process, rather than forcing employees to wait through lengthy mail delays.

• Real-Time Diagnostics and Actionable Solutions – Seek advanced systems that can help users instantly resolve account issues, such as FSA cards being declined at the point of service because of insufficient funds or because they have not been activated. These solutions should provide clear explanations and guide employees through the process to resolve issues on the spot.

Related: Cost-sharing is key to choosing traditional plans, HDHPs and HSAs, say employees

The employer’s perspective

Outdated tools and technology not only frustrate employees and prevent them from taking advantage of valuable benefits, they also can hinder employers’ ability to support HSAs and FSAs. HR departments face mounds of paperwork, are forced to deal with manual processes for running reports and are often left to deal with solutions that cannot be customized to meet the company’s unique needs.

Adoption of modern technology allows employers to design customized plans, obtain the necessary reporting to evaluate program effectiveness, and eliminate the hundreds of hours spent on tedious manual work—which frees up resources to provide greater support and take on new initiatives that benefit employees. New solutions now on the market can simplify these processes, so employers can make HSAs and FSAs more accessible and appealing to employees. These changes will ultimately drive higher adoption rates during open enrollment and encourage employees to maximize usage of their benefits.

HSAs and FSAs don’t need to remain so complicated and confusing that only a small percentage of employees opt-in and HR departments struggle to manage them. By embracing modern technology, both employers and employees can navigate open enrollment more effectively and maximize the financial advantages of these health savings accounts.

Brian Cosgray is the co-founder and CEO of Elevate, a technology company shaking up the slow-moving world of employee benefit accounts—HSAs, FSAs, HRAs —with an automated, ultra-reliable platform that empowers account admins to do more with less.