The COVID-19 pandemic has forced us all to focus more on preparing for the future -- both the retirement we can plan for and the safety net we need for the unpredictable. As described by Rob Hecker, Vice President of Total Global Rewards at Unum, "Choosing your benefits is one of the most important financial decisions [employees will] make this year. Today’s pandemic reminds us that we need to be prepared for life’s unexpected health events.”
When it comes to preparing for health events and their associated costs, two benefits stand out from the rest: FSAs and HSAs.
FSAs and HSAs provide ways to safeguard against healthcare and personal costs, with HSAs serving an additional purpose as a retirement savings tool. However, there are still a significant number of organizations that aren’t participating in the rate brokers would expect. Here are some conversations you can have with your clients to increase FSA and HSA participation:
- Demonstrate the tax and payroll savings
One of the biggest benefits of FSAs and HSAs is their tax advantages. Since employees fund their accounts through payroll deductions, they are taxed on less income. For example, a family that earns the 2020 household median income ($63,688) and contributes the maximum ($2,750) will end up saving about $1,000 in payroll taxes throughout the year. Employers also benefit since they aren’t paying payroll tax on the funds contributed to FSAs and HSAs.
You can demonstrate the tax and payroll savings by sharing a savings calculator and using real-life examples to quantify the potential benefits. These tools can then be passed down to individuals so they can see their potential savings and be more likely to enroll.
- Highlight the expanded product offerings
The CARES act, passed in 2020, included two key provisions related to what products are eligible for FSA and HSA reimbursement: over-the-counter medications and menstrual care products.
This means people can use their FSA and HSA dollars to stock their medicine cabinets and purchase everyday items rather than needing a prescription for most medications. This is in addition to items like thermometers, first-aid products, and other cold/flu/allergy products.
Make sure clients are aware of these important updates and provide them with a list of eligible products so they can see how many of their everyday items they could be saving on by purchasing tax-free through an HSA or FSA.
- Update communication and utilize helpful tools
We’ve said it time and time again, communication is key. The value of FSAs and HSAs is legitimate, but that only goes so far if nobody knows about all the benefits. As a broker, you can play an important role in shining the light on FSAs and HSAs to increase participation.
You’ll need the right tools for the job -- it’s important to make sure that all communications and tools to facilitate it are updated. Also, ensure that all of your written material has been updated to reflect the new product offerings and saving potential.
For an even stronger opportunity to help communicate the benefits of FSAs and HSAs, make sure your clients know how benefit administration platforms give them the option to automatically share information and provide decision-support tools that make enrollment seamless.
- Explain the importance of being Ready For Life
Often an HSA or FSA isn’t thought about until it’s needed -- at which point, it’s too late. FSAs and HSAs help employers and individuals be ready for anything that could come their way. That takes an enormous amount of pressure off people who have faced an uncertain past year.
HSAs take being ready for life a step further. First, our HSA provides a funding advance so employees just setting up their HSA don’t have to wait months for payroll deductions to add up – they can have money readily available in their account to use on expenses today. Then, over time they can save to this account for anticipated yearly medical expenses (like the FSA) but they can also save for the future because the money never goes away. They can save for anticipated medical costs they will incur in retirement or save for a procedure that might be a few years down the road. And, it is all tax free – just like other retirement savings like a 401(k).
Now, being ready for life isn’t just a perk, it’s a necessary part of a benefits package. Help your clients see how an FSA or HSA could help them provide that peace of mind for their employees. Clarity’s FSA and HSA programs make it even easier to do this, with user-friendly features and on-demand payroll advances. Learn more here.