Five Myths About HSAs

Five Myths About HSAs

Common Misconceptions

Five False Impressions

Here are five of the most common myths and the responses you can use to help your clients understand the advantages of these accounts.

Number One: My employees won’t accept HSA plans ~ they’re too complicated.

While it’s true that this type of health plan can be a bit more complex than a traditional plan, it can be well worth it for employers. Clients need to know more about how the programs work and what costs they can expect. The plan offers important costs savings for both the employer and employee. HSAs actually provide comprehensive health care coverage, and most HSA-qualified plans cover prescription drugs, doctor’s office visits and preventative care without a deductible. One key difference with coverage and costs is consumer-directed plans emphasize individual decision-making. Employees have an incentive to avoid paying for unnecessary services because they keep the money they don’t spend. In the end, this improves health care costs, efficiency and wellness.

Number Two: There aren’t many advantages.

Untrue! HSAs offer:

  •  Flexibility in how employees spend their medical dollars;
  •  Tax deductible contributions;
  •  A way to offset high deductibles;
  •  More control for employees over their healthcare decisions;
  •  A way to make employees more engaged in their health plan.
“Seventy-seven percent of the HR professionals whose companies offer HSAs say it has helped engage employees in their health and wellness.

How HSAs Help Those Nearing Retirement Age

HSAs can be an effective tool for those who are nearing retirement age and looking for a nearly tax-free account to save for health care expenses during their pre-retirement years. People aged 55 and older can make catch-up contributions each year that is over and above the allowable limit for the individual year. The catch-up contribution for 2011 is $1,000, and employees can make contributions until becoming Medicare active.

What’s Next?

The HSAs have survived health reform to become a growing force in the market. Employers are greatly in need of brokers who can help them decipher this ever increasing popular healthcare option.

Number Three: They’re only for young, healthy people.

HSAs are useful for people of any age or health. HSA enrollment is nearly equal across age groups. Forty-nine percent of all HSA/high-deductible health plan enrollees in the individual market, including dependents covered under family plans, were age 40 or older, according to a January 2011 report from America’s Health Insurance Plans.

Number Four: My employees can’t afford it.

Since HSAs are paired with high-deductible health plans, it’s a common misconception that HSAs are for people with high incomes who can more easily afford to pay for a high deductible. In reality, HSAs are a powerful vehicle to save and pay for health care expenses, regardless of income level. According to a March 2011 study by Employee Benefits Research Institute, a little over half of HSA plans are carried by families with incomes of less than $100,000.

Number Five: If we offer it, our employees won’t contribute funds to it.

A common criticism of HSAs is that employees will take the high-deductible insurance and then never make contributions to the HSA. But data has steadily shown that a majority of individuals, including those at low-income levels, contributed their own funds to their accounts and carried over balances the following year. This behavior shows that people understand how their benefits work and realize the advantages of saving for future health-care expenses.

Employers can help increase their employees’ choosing an HSA by giving their employees either a one-time or a systematic contribution. Several surveys have showed that when employers contribute to the HSAs, the percentage of employees who open accounts improved to 86% of those eligible, up from 27% when no contribution was made.

Article From:Health Net of Arizona

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