Anyone who has seen the movie “A Few Good Men” knows about this key scene: Tom Cruise’s Navy lawyer character, Lt. Daniel Kaffee, has Jack Nicholson’s Lt. Col. Nathan Jessep on the witness stand and is fiercely questioning him on the details surrounding an incident that happened at the Guantanamo Bay Naval Base. Finally, Nicholson admits that it was he who in fact ordered the “Code Red” with the now famous line, “You can’t handle the truth!”
It may not have the same Hollywood flair for the dramatic — but when it comes to providing a better Health Savings Account (HSA) to employees, there are companies who could also gain from hearing “the truth.” And that truth is: Four common misconceptions about HSAs are preventing employees from getting the most value out of their account.
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What value are employees missing? Consider the statistics included within a survey from the Employee Benefit Research Institute that examined ten years of industry data. Only 37% of employees with access to an HSA contributed the maximum amount allowed. Additionally, approximately 63% of employees with HSAs were not taking full advantage of the tax benefits and savings potential offered by these accounts. Employers may believe that employees are taking full advantage of their HSAs, but the numbers do not bear this out.
Challenging these commonly held myths could help benefit managers and HR administrators increase employee engagement and satisfaction. Here are the four HSA misconceptions to examine:
Myth 1: Our HSA solution is fine because employees aren't complaining
Many companies assume that employees are happy with their HSA because they are not actively voicing dissatisfaction with the program. The reality is that many employees are simply unaware of how much they could be saving on health expenses and how to better optimize their HSAs – as demonstrated in the aforementioned report from the Employee Benefit Research Institute. Companies should ensure their employees receive consistent education and communication about their HSA benefits so they understand how to generate the most value from them.
Myth 2: It's not worth the effort to change HSA providers
This misconception can prevent HR professionals from exploring new – and potentially more valuable – HSA options. While staying with the same provider can be attractive because of the time and effort needed to switch, there are a wealth of potential benefits that can outweigh these temporary inconveniences. Companies may find they have missed an HSA offering that delivers more user-friendly platforms, expanded investment options or enhanced educational resources. In turn, these improvements can lead to increased contributions, higher usage and ultimately greater savings for both employees and employers.
Myth 3: Employees using their HSA does not affect the company
This belief overlooks the broader impact on employees and their wellbeing. It is true that the company benefits financially through Federal Insurance Contributions Act (FICA) tax savings from increased contributions, but the employees are still the primary beneficiaries. Higher contributions directly impact employees’ financial wellness through greater tax savings and more resources available for health care expenses. As a result, encouragement from HR can lead to overall improvement of financial wellness for employees and higher job satisfaction.
Myth 4: HSAs are for “savers” and not “spenders”
The vast majority of HSA users can be classified as spenders rather than savers, but this doesn’t mean that those not maximizing their accounts for savings and investments should be overlooked. Employees need to be better educated so that they can understand that they leave money on the table by not contributing more and therefore missing out on savings toward everyday expenses. As a result, even modest increases could potentially make a difference when it comes to tax savings and individual health care costs.
Handling the truth
Although Jack Nicholson’s line in the movie didn’t help his character’s cause, employers should be inspired to confront the truth of their HSA programs. Many employees simply are not fully benefiting from their HSAs due to persistent myths about these accounts. By challenging these misconceptions, employers can take the steps necessary to strengthen their plan offerings, improve employee education around benefits, weigh the alternatives of supplying more effective providers and encourage broader employee participation.
Facing these truths can lead to a better situation overall for both employer and employees. Workers gain greater financial security and tax savings, while employers benefit from increased satisfaction, retention, and potential FICA tax savings. By "handling the truth" about HSAs, employers can create a more engaged workforce and a stronger benefits package that truly serves everyone's interests.
Dan O’Connor is the vice president of sales and employee benefits at InComm Benefits, a division of InComm Payments that offers automated and intuitive Health Savings Account (HSA) and Flexible Spending Account (FSA) services. The accounts’ banking services are provided by Coastal Community Bank, member FDIC.
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