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HSA confusuion continues

BY Stephen Miller

As more American employers turn to high-deductible health plans to reign in escalating health care expenses, many are offering health savings accounts (HSAs) in an effort to encourage workers to make cost-conscious health care decisions. But according to a recent survey by financial services firm Fidelity Investments, two-thirds (65 percent) of Americans who make household health-benefit decisions simply do not understand how an HSA works.

Growth in HSA-eligible high-deductible health plans has continued at a brisk pace in recent years. However, many employees may be missing out on the short- and long-term savings opportunities of HSAs because they don’t know enough about them. With the annual open-enrollment period approaching in the early fall, “the time to educate employees who are offered HSAs on their features is now, prior to them making a yearlong commitment that precludes them from taking advantage of the accounts’ many benefits,” Fidelity Investments Vice President William Applegate, in a media release.

Confusion between HSAs and FSAs

Confusion between an HSA and a flexible spending account (FSA) remains high. A full 73 percent of respondents said an HSA is pretty much the same thing as a health FSA or were unsure, and the “use it or lose it” provision of FSAs was 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, 69 percent of respondents incorrectly believed they would lose unspent money in an HSA at the end of the year (see the box below for more about these accounts). 

HSAs vs. FSAs: Key Differences

HSAs, which help individuals save for future qualified medical expenses, must be linked to high-deductible health insurance plans (in 2013, deductible minimums were $2,250 for individuals and $2,500 for families). HSA accounts are employee-owned, and contributions can be made by the employer, the worker or both, using pretax dollars. Funds employees withdraw to pay for health care services are not taxed. Amounts saved in an HSA accumulate over time (there is no use-it-or-lose-it rule). The Society for Human Resource Management’s 2013 Employee Benefits survey of SHRM members showed that 42 percent of organizations provided HSAs as a health care benefit in 2013, up from 32 percent in 2009. Twenty-six percent of companies contributed funds to their employees’ HSAs.

HSAs differ from health reimbursement arrangements (HRAs), which employers own and fund. Unlike money in HSAs, HRA funds revert to the organization when a worker leaves.

FSAs, like HSAs, also allow employees to deduct pretax dollars from their paychecks to pay for eligible out-of-pocket health care expenses. FSAs need not be coupled with high-deductible plans, however, and workers must spend annual contributions by the end of the year (extended by a 2½-month grace period if the plan allows) or they forfeit the remaining funds. According to SHRM’s survey, 70 percent of organizations offered health FSAs in 2013.

Finances Key Driver for HSA Participants

Financial considerations were the top factors in the decision of the Fidelity survey respondents who chose their employer’s HSA-eligible health plan and opened an HSA. When asked the reasons behind their choice, 48 percent said HSAs allow account holders to carry over remaining funds year to year, 45 percent cited lower premiums, 38 percent mentioned the tax savings, and 25 percent said an HSA is an attractive savings vehicle for their anticipated health care expenses in retirement.

Employer Seen as Most Influential

Nearly two-thirds (65 percent) of respondents who opened an HSA via their company’s health plan said they received the right amount of employer communication to help them make the decision. Of these respondents, the most influential source that helped guide their decision was their employer or spouse’s employer.

Contrasting these findings, of those respondents who were offered an HSA-linked coverage option but declined it, only 9 percent said their employer influenced that decision, and 55 percent spent less than a half-hour researching their health care benefit choices, a decision that may have a long-term financial impact. 

“It’s clear more can be done to educate employees on the benefits of HSAs, from saving for current and long-term qualified medical expenses to factoring health care costs into retirement planning,” said Applegate. 

His advice: “Employers that offer HSAs should deliver employees easy-to-understand communications and intuitive decision-support tools, along with onsite and online workshops that clearly explain how HSAs work and how employees can benefit.”

Stephen Miller, CEBS, is an online editor/manager for SHRM.

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Kiewit names new senior VP of Hawaii division

BY HBSDealer Staff

Nebraska-based construction company Kiewit has promoted Lance Wilhelm to senior VP of its Hawaii operations.

Wilhelm will be leaving his post as area manager, wherein he oversaw the company’s Hawaii vertical building operations, which included the construction of the Trump Tower in Waikiki. In his new role, he will oversee lead market, industry, operations and community involvement in the region, as well as continue to play a significant role in the construction of the Honolulu Rapid Transit System.

“Lance is a great fit to lead our company’s efforts in this important state,” said Scott Cassels, executive vice president of Kiewit Corporation. “A 24-year veteran of Kiewit and the Hawaii construction industry, Wilhelm brings significant depth and experience to his expanded new role.”

He previously served as estimator, superintendent, project manager and business manager for for Kiewit.

He is also VP for the General Contractors Labor Association, chairman of the YMCA in Honolulu, vice chairman of the board of trustees at Kamehameha Schools and a board member for the Aloha Council, Boy Scouts of America, the West Oahu Economic Development Association, the National Association of General Contractors and the University of Hawaii Foundation.

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Alleged shoplifters target Home Depot in lawsuit

BY HBSDealer Staff

The Home Depot is the subject of a class-action lawsuit claiming that the world’s largest home improvement retailer is impropertly negotiating for settlement with shoplifting suspects.

The complaint was originally filed in Alameda, Calif. by Jimin Chen. According to media reports, Chen claims he forgot to put a pair of gloves into the shopping cart in time for the cashier to notice. He later received a letter from Palmer, Reifler & Associates asking for a $350 settlement. He got another letter a couple weeks later asking for $625, threatening legal action otherwise, he claims.

According to Bloomberg, Palmer sends out more than a million demand letters on behalf of Home Depot each year.

Atlanta-based Home Depot spokesman Stephen Holmes told HCN that the general practice is within the company’s legal bounds.

"We’re still reviewing the details of the complaint, but we do disagree that the general practice of civil demands is unlawful," he said. 

ABC News reports that one of Chen’s lawyers, Christian Schreiber, referred to the letters as a "fraudulent business practice…likely to deceive members of the public as to their legal rights and obligations." Schreiber claims that the retailer has yet to act on any of its threats to sue customers, suggesting that it is merely playing a "numbers game" together with the law firm that depends on a certain percentage of customers paying the settlements.

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