HSAs: What Employees Need to Know

As mentioned in last week’s blog on high deductible health plans, it’s important to educate employees about how this plan works. Your messaging should include the benefits of an HSA as well as how to make the most of this unique savings component. Here’s the messaging we recommend.

  • Triple tax savings. Let employees know they can save money with an HSA. They contribute to an HSA with pretax dollars. Their contributions grow through tax-free interest or investments. And the money they take out to pay for eligible health care expenses is tax-free.
  • Spend, save or invest their money. Employees can spend the money for eligible health care expenses now, or save the money in their account for future expenses. They can also invest their money. And after they turn age 65, they can use the money in their HSA for anything, not just health care expenses.
  • Eligible expenses. Employees can use money in their account to not only pay for eligible medical expenses, but eligible dental and vision expenses, too.
  • Dependents. Employees can also use their HSA money to pay for a qualified dependent’s eligible expenses even if their HDHP does not cover the dependents.
  • No use-it-or-lose-it rule. The money in their account is theirs. If they don’t spend it, the money stays in their account and grows over time. Let them know the account is portable — it stays with them even if they change employers or stop working.
  • Company contribution. If your company makes a contribution to the HSA, tell them. Be sure to spell out how they receive the money: all at once, twice a year, with every pay period.