Last month, a reader commented on the Health Savings Accounts: A Primer blog post and asked “What messages will resonate with younger employees to take advantage of HSAs even though they may not deduct expenses, they may struggle to cover expensive Boston rents, or they still feel healthy and invincible and an HSA is not even on their radar?”
Todd Berkley, Senior Vice President and Managing Director for BenefitWallet®, shares his ideas.
The extra cost of health care can be a burden for younger employees. In order to engage them in using a Health Savings Account (HSA), emphasize the built-in cost savings of an HSA-qualified plan. According to a Kaiser Family Foundation/HRET survey, the average HSA-qualified plan is $2,665 less than the average traditional plan, and about $1,600 of that is the employee’s contribution to premium. There is a 100% chance they will realize the premium savings, and a lower chance of high out-of-pocket costs for younger, healthy people.
The other suggestion I’d make is to encourage your young employees to think of HSA savings as part of their retirement planning, not just as a better health spending vehicle. Like a 401(k), the best way to do this is “out of sight, out of mind”. Payroll contributions are the best way to save and also give the employer additional FICA savings, usually more than enough to cover the costs of providing the accounts and paying the fees for your employees. In our experience at BenefitWallet, the average employer saves $70 in FICA savings alone from payroll contributions to HSAs – and that could be much larger with more focus on HSA savings growth.
Consider setting up employees on an automated HSA savings plan like many companies do for 401(k)s – start at a certain percentage (perhaps equal to their premium savings from the previous plan) and increase their contribution a bit each year. A young person who begins an HSA savings plan early will be a more confident and prudent consumer of health care services throughout their life as a result.
Most young employees are ideal candidates for HSA plans and accounts if they understand the long -term implications. An annual check-up may be covered free of charge and is often all the health care services a younger employee needs. Like any savings plan, the earlier an employee begins the more value it creates over the long term. By locking in premium savings and putting the difference away, an employee can build up a nice hedge of protection against expenses while they are young and are likely to have lower health care expenses – knowing that a family and middle age come along to change that pattern. Lessons learned in navigating the health system with HSA cash can pay big dividends later in life.