Are your employees still struggling to understand the differences between flexible spending accounts (FSAs) and health savings accounts (HSAs)? They’re not alone. Fidelity Investments found that two-thirds (65 percent) of Americans who make household health-benefit decisions simply do not understand how an HSA works. And 73 percent said an HSA is pretty much the same thing as a health FSA.
The “use it or lose it” provision of FSAs is still one of the most commonly misunderstood differences between the account types. Unlike an FSA, HSA balances carry over from year to year, allowing account holders to accumulate their savings for qualified health care needs. Yet, most employees incorrectly believe they will lose unspent money in an HSA at the end of the year.
As more employers move to high deductible plans with HSAs, it’s important to educate employees about how an HSA works and the triple tax advantages they provide. At the same time, employees who stay in lower deductible plans should understand how they can use an FSA to their advantage.
So what can you do?
- Be clear about which plans can be used with an FSA and which are connected to an HSA.
- Explain both types of accounts in clear, concise terms, using everyday language.
- Provide examples of how the high deductible plan with HSA compares in total out-of-pocket costs to other plans. Include the cost of coverage in your examples and feature scenarios for light, medium and heavy users of health care services. These “people like me” scenarios can help employees to determine which plan might be right for them.
- Offer online or onsite meetings to explain both accounts and answer questions on the spot.
- After annual enrollment, continue to educate employees on their plan via your benefits website.
- Point employees to online information from your FSA and HSA administrator as well as general information.
As we transition employees to plans that require them to take more responsibility for their health care decisions, it’s important that we provide the tools and education they need to make smart decisions.
Happy writing!
