Category:
Health Savings Accounts (HSA)

Where Mobile Meets Financial & Physical Health

Where Mobile Meets Financial & Physical Health

06/20/2018

by Jackie Dornfeld

 

The financial and physical health of many Americans is alarming. About 40 percent of U.S. adults cannot cover a $400 emergency expense1, and less than three percent of Americans live a “healthy lifestyle”2.  In addition, according to the 2018 WEX Health Clear Insights Report, most U.S. workers find healthcare confusing, spend less than 30 minutes annually making benefit decisions, and are increasingly concerned about out-of-pocket medical expenses today and in retirement. All of this can result in a vicious cycle of financial insecurity, leading to stress and chronic disease, and ending in devastating medical expenses and financial ruin. Frightening.

 

Building Resilience

To help break this spiral, consumers need support in developing resilience against health and financial stress. According to the Center for Financial Services Innovation (CFSI), helping consumers use good judgement and a strategy to spend, save, borrow, and plan can help build financial health:

Source:  CFSI, Insuring the Way to a Financially Resilient America, June 2018

 

 Enter Consumer-Driven Health and Mobile Technology

A tax advantaged, consumer-driven health account such as a health savings account (HSA), health reimbursement arrangement (HRA), or flexible spending account (FSA) accessed using mobile technology is one specific path to resilience. For instance, paying for qualified medical expenses with HSA funds can yield savings of 22 to 40 percent. And, with 79 percent of U.S. consumers now owning a smartphone3, many consumers prefer using mobile apps to manage both their personal finances and health benefits.  

 

Building the Right Consumer Experience

The WEX Health Cloud Mobile App is an example of how key features can be delivered that help consumers use their consumer-driven health account to spend, save, borrow and plan.

With the WEX Health Cloud Mobile App, Consumers Can…

  • Spend:
    • Use fingerprint login and enhanced authentication options to:
      • Pay bills using HSA, HRA, or FSA funds
      • Snap a photo of a receipt and submit with a new or existing claim
      • Request an HSA distribution
    • Save:
      • Contribute funds to an HSA or FSA to build savings
      • View HSA investment details to gauge progress against savings goals
    • Borrow:
      • Check account balances including HSA Advance, which is a WEX Health feature that allows employees to borrow against future HSA balances to cover unplanned expenses
    • Plan:
      • Scan a product bar code to determine eligibility as a qualified medical expense
      • View “Account Snapshot” graphics to assess status of account details

 

 

Looking to the Future

As consumers become more sophisticated and their digital expectations grow, opportunities exist to enhance and personalize the mobile experience even further with price transparency tools, calculators, targeted messaging, guidance tools, fitness resources, and more. By delivering mobile innovations that engage consumers in managing their financial and physical health, we empower better decision-making and accountability for millions of Americans.

 

To learn more about consumer attitudes and expectations regarding healthcare expenses, preferences for using online tools and mobile apps, and more, read the 2018 WEX Health Clear Insights Report.

 

Footnotes:

  1. Report on the Economic Well-being of U.S. Households, 2017
  2. Healthy Lifestyle Characteristics, Mayo Clinic Proceedings, 2016
  3. ComScore, 2016

 


Jackie Dornfeld

Senior Director of Product Management at WEX Health

Jackie Dornfeld is the Senior Director of Product Management at WEX Health, responsible for annual product roadmap planning and the research, definition, and launch of new products including the WEX Health Cloud Mobile App.  She has over 25 years in health care including leadership positions in the areas of product development, product management, marketing and strategic planning.  Prior to joining WEX Health in 2008, Jackie held roles in the TPA, health plan, consulting, and hospital industries and is currently active on the Membership Committee of the Women’s Health Leadership Trust.  Jackie received a BA from St. Olaf College in Northfield, MN, and an MBA from the University of St. Thomas in St. Paul, MN.  


Everything You Need to Know About Last Week’s Congressional Hearings on HSAs

Everything You Need to Know About Last Week’s Congressional Hearings on HSAs

06/14/2018

by Chris Byrd

 

Last week, two separate congressional committees convened to explore how consumer-directed healthcare plans (CDHPs) and high-deductible health plans (HDHPs), when paired with health savings accounts (HSAs), can make healthcare more affordable and accessible for Americans. American consumers have established more than 22 million HSAs, a figure that has grown steadily in recent years and is expected to reach 27.5 million by 2019.

 

On Wednesday, the House Ways and Means health subcommittee held a Capitol Hill hearing on the role of CDHPs in expanding access to healthcare, lowering healthcare costs and increasing the number of choices available to consumers. The hearing addressed everything from trends in HSA enrollment to policies that would give more consumers access to tax-advantaged savings accounts.

 

It began with a testimony by Health Subcommittee Chairman Peter Roskam, who said, “Healthcare reform should empower individuals and families to make decisions for themselves based on what fits their needs and budget. One of the best tools we have to accomplish this goal is consumer-directed health plans that are paired with HSAs. These plans offer lower premiums and a higher deductible to encourage better use of healthcare services. Engaging consumers in their healthcare spending is critical to reining in our system’s ever-increasing costs.”

 

Other experts who spoke at the hearing include Roy Ramthun, president of HSA Consulting Services; Matt Eyles, president and CEO of America’s Health Insurance Plans (AHIP); Jody Dietel, chief compliance officer for WageWorks; and Sherry Glied, dean of New York University’s Robert F. Wagner Graduate School of Public Service.

 

The following day, the Joint Economic Committee also met to discuss the potential for HSAs to engage patients and bend the healthcare cost curve. Including members of both the House and the Senate, the committee reviews economic conditions and recommends improvements in economic policy. Among those who spoke at its most recent hearing, Kevin McKechnie of the HSA Council, Tracy Watts of Mercer and the American Benefits Counsel and Dr. Scott Atlas of the Hoover Institution explored statistics on the adoption and usage of HSAs, their effect on healthcare expenditures and both the short and long-term effects of greater adoption of CDHPs and HDHPs/HSAs respectively.

 

Dr. Atlas concluded his testimony with this call to action: “Expanded, liberalized and transferable HSAs represent a key instrument in an overall strategy of broadening access to affordable, high quality healthcare for everyone. If appropriately designed, HSAs represent a strong incentive to consider price and value for those seeking medical care. HSAs offer more effective incentives than tax deductions for health expenses. HSAs have been proven to reduce the cost of medical care for individuals, and also to improve health by increasing the use of validated wellness programs. While expanded HSAs alone are not necessarily a panacea, they are a critically important and effective step.”

 

At the crux of both hearings last week was the assertion that as CDHPs become of increasing importance to Americans, more legislation is needed to make them even more beneficial to consumers; this would require numerous amendments to the tax code.  According to McKechnie “These ideas are vetted, bipartisan, and affordable. Some would actually save taxpayer money. Individually and together, they can dramatically strengthen the proven, successful HSA model.”

 

The House Ways and Means health subcommittee hearing, which streamed live on the web, can be viewed in full below.

 

 
The Joint Economic Committee’s hearing on HSAs can also be viewed in full below:

 

Health savings accounts in many ways offer something for everyone. To learn more about their advantages, read our blog post here.

 


Chris Byrd

Executive Vice President, WEX Health Operations & Corporate Development Officer

Chris Byrd brings more than 25 years of experience in employee benefits and banking to his role at WEX Health. A founder of Evolution Benefits in 2000, Chris played a key role in designing the proprietary architecture for the company’s prepaid benefits card.

Chris oversees the daily execution of WEX Health’s business and leads the company’s operations and service delivery, corporate development, merger and acquisition activity, and legal, industry, and government relations efforts.

He began his career in commercial banking, and prior to 2000, he focused on finance, strategy, and business development for Value Health and two start-up healthcare companies. He joined WEX Health in July 2014.

Chris, who serves on numerous industry boards, is a frequent speaker on emerging trends in financial services and benefits and is active in industry and government relations. He earned a degree in economics from Brown University.  


3 Ways to Help Your Employees Manage Their Healthcare Expenses

3 Ways to Help Your Employees Manage Their Healthcare Expenses

03/30/2018

 

The United States now spends almost twice as much on healthcare as other advanced industrialized countries, even though just a few decades ago our healthcare spend was closely aligned to that of other countries. As a result of the rising cost of healthcare, changes to employment and benefits laws and the availability of new benefits options, the employee benefits landscape in the U.S. has also been dramatically altered. One in four Americans now report that the cost of healthcare is the biggest concern facing their family, according to a Monmouth University poll. This makes it more important than ever for employers to offer their employees the guidance and tools they need to manage their healthcare plans and costs. Here are three approaches that can be used alone or in combination:

 

  1. Educate your employees about the financial benefits of HSAs, HRAs and FSAs.

Consumer-directed health plans (CDHPs) are the lowest overall cost option for employees in 65 percent of companies that offer them. They are typically paired with a triple-tax-advantaged health savings account (HSA), a health reimbursement account or a flexible spending account that allows employees to save for out-of-pocket expenses. The National Bureau of Economic Research reports that employees save an average of more than $500 per year by selecting a high-deductible health plan.

The HSA contribution limit for 2018 is $3,450 for singles and $6,850 for families, but employees just getting started with an HSA can be encouraged to save as little as one to three percent of their salaries into their HSA. By building a small amount of health savings, they won’t “feel” incremental healthcare costs as sharply and will be better prepared to handle both expected and unexpected medical expenses in the future. Want more information about HSAs and how to communicate their value to your employees? Read our blog post.

 

  1. Provide your employees with benefits-based incentives related to their health and wellness.

Incentivizing employees to take an active role in improving their poor health behaviors can reduce their health risks and subsequently their healthcare costs. One WellSteps study, for example, found that post-implementation of a corporate employee wellness program there was a dramatic difference in the cost of medical care between program participants and non-participants ($3,280 versus $6,177).

Employers can also help their employees save money by offering them benefits-based incentives for participating in a workplace wellness program. Such incentives may include lower office copays, reduced deductibles or monthly premium discounts in exchange for health risk assessment completion, participation in weight-loss or smoking cessation programs or other workplace wellness activities.

 

  1. Give your employees tools to manage and plan for their healthcare expenses.

Analytics programs such as the WEX Health Cloud Consumer Dashboard make it easy for employees to get an aggregate view of all their healthcare claims, debit card transactions, distributions and expenses. Expenses can be viewed by category, individual or provider, and employees can initiate payments for expenses including reimbursements, pay the provider and bill pay.

A corresponding mobile app also lets employees view, budget, plan, analyze and manage their healthcare-related accounts and expenses, helping them more wisely manage their healthcare spending.

Employers and HR managers who facilitate healthcare consumerism among their employees will help them save money on healthcare costs. As a result, employers stand to gain a real competitive advantage over others in their industry—a workforce that is not only easier to hire and retain but also perhaps better informed and even healthier because of the tools you’ve provided.

 

Related Posts:

Employers, These Are the Current Benefits Issues You Need to Know About

What You Need to Know About Data Security and Wearable Devices in the Workplace

Employers, This Is the Comparative Data You Should Use to Evaluate Your Benefit Plans

The IRS Has Lowered the HSA Family Contribution for 2018

New: The IRS Has Lowered the HSA Family Contribution for 2018

03/07/2018

 

On Monday, March 5th the IRS said in a service bulletin that it has recalculated the maximum amount that a family can contribute to a health savings account (HSA) in calendar year 2018, reducing it by $50 to $6,850. It had previously announced the 2018 figure would be increased to $6,900.

 

This change was made, effective immediately, to reflect the Tax Cuts and Jobs Act of 2017, signed into law on Dec. 22, 2017. The law ties HSA limits and other employee benefits such as health flexible spending accounts (FSA), commuter plans and adoption assistance benefits to the chained consumer price index (chained CPI), reflecting a change in the way it previously calculated cost-of-living increases.

 

The HSA contribution limit change only applies to family-level coverage, leaving the individual contribution limit for HSAs in 2018 at $3,450. FSA limits were also not affected.

 

2018 Contribution and Out-of-Pocket Limits
for Health Savings Accounts and High-Deductible Health Plans

  2018
HSA contribution limit (employer + employee) Self-only: $3,450
Family: $6,850*
HSA catch-up contributions (age 55 or older)* $1,000
HDHP minimum deductibles Self-only: $1,350
Family: $2,700
HDHP maximum out-of-pocket amounts (deductibles, co-payments and other amounts, but not premiums) Self-only: $6,650
Family: $13,300

*IRS announced change on Monday, March 5, to the family HSA contribution limit.

 

Ensure your employees aren’t taxed for excess contributions

Any contribution to a family HSA account over $6,850 in 2018 will be considered an excess contribution, and will be hit by a 6 percent excise tax. To ensure that none of your employees are taxed in this way, you need to be able to identify those who have already contributed the maximum amount into a family account for 2018 (the excess contribution will need to be refunded). There is no grandfathering in for HSA accounts that were fully funded at $6,900 prior to the March 5, 2018 IRS notice.

 

There are two options for those that have already fully funded their family HSA account in 2018 at the previously announced 2018 amount of $6,900:

  • Leave the full amount ($6,900) in the HSA account and include the $50 as other income and pay the penalty
  • Take a distribution for HSA excess contribution for the $50, leaving the HSA balance at the new IRS family maximum of $6,850

 

You should also evaluate your employees’ payroll elections to determine if their contribution amounts need to be adjusted so that they don’t end up exceeding the annual limit.

In its recent bulletin, the IRS additionally defined a high-deductible health plan as a plan with an annual deductible that is not less than $1,350 for self-only coverage or $2,700 for family coverage, and the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $6,650 for self-only coverage or $13,300 for family coverage. This definition has not changed since its previous announcement.

 

Stay up to date on the latest HSA news by following WEX Health on Twitter @wexhealthinc. And learn more about HSAs with our blog post that tells you everything you need to know about these tax-advantaged accounts.

Everything You Need to Know About Health Savings Accounts

Everything You Need to Know About Health Savings Accounts (HSAs)

02/27/2018

 

If you have questions about health savings accounts, we have answers:

 

1. What is an HSA?

A health savings account (HSA) is a tax-advantaged account established to pay the current and future qualifying medical expenses of the account holder, the account holder’s spouse and all of the account holder’s tax dependents. With money from this account, you pay for healthcare expenses that are not covered by the account holder’s HSA eligible health plan.

 

2. Am I eligible to have an HSA?

To put money into a health savings account, you are required to have an HSA eligible health plan— sometimes referred to as a consumer-directed health plan (CDHP) or high-deductible health plan (HDHP)—in effect on the first day of the month.  Additionally, you are not permitted to have any other health coverage that reimburses non-preventative products and services below the deductible, and you cannot be enrolled in Medicare or be claimed as a tax dependent on someone else’s tax return.

 

3. What is a high-deductible health plan (HDHP)?

An HDHP is simply health insurance that meets certain minimum deductible and maximum out-of-pocket expense requirements set forth by the IRS.

 

4. What are the benefits of having an HSA?

Health savings accounts in many ways offer something for everyone, offering you a way to gain some financial security today and in the future. As triple tax-advantaged accounts, health savings account contributions can be deducted pretax from your paycheck, lowering your taxable income; any interest or investment gains on the money is tax free; and withdrawals from an HSA are tax free, as long as the money is spent on qualified medical expenses.

 

5. What qualifies as IRS-qualified medical expenses?

HSA funds may be used tax-free when paying for qualified medical expenses as described in section 213(d) of the Internal Revenue Service Tax Code.  A list of these expenses can be found on the IRS website at www.irs.gov in publication 502 – Medical and Dental Expenses.

 

6. Can I take money out of my HSA for non-medical expenses?

Yes, but if you withdraw money to pay for something other than a qualified medical expense, you will have to include that distribution as other income when filing taxes and pay an additional tax of 20 percent penalty on the amount used for a non-qualified expense.

 

7. Do HSA funds rollover?

Yes, any unused funds are yours to retain in the health savings account and accumulate toward future healthcare expenses. Your HSA is portable, meaning that you can take it with you if you change employers and into retirement where funds may be used for non-qualified medical expenses without being subject to the 20 percent penalty.

 

8. What’s my HSA contribution limit?

The IRS provides inflation-adjusted health savings account contribution limits each year. For 2018, if you’re covered by an individual HSA eligible health plan, sometimes referred to as a consumer-directed health plan (CDHP) or high-deductible health plan (HDHP), the IRS allows you to put as much as $3,450 into your health savings account (HSA). If you’re contributing to an HSA and on a family CDHP, the maximum amount that you can contribute is $6,900.

 

If you’re 55 or older, you can contribute an extra $1,000 annually for a total of $4,450 or $7,900 for account holders on a family plan—with catch-up contributions accepted at any time during the year in which you turn 55. These HSA contribution limits are new for 2018 and just slightly higher than in 2017—$50 more for self-only coverage and $150 more for those on a family plan.

 

Need help determining how much you should set aside in your HSA each month to reach your retirement savings goal? WEX Health provides a free HSA Goal Calculator that you can use to determine the right amount for you.

 

9. Are HSAs used to pay for current medical expenses or to save for retirement?

Either or both. Because healthcare costs during retirement can be daunting, HSAs have become a favorite way to put money away for future medical bills while lowering taxable income. One oft-cited estimate from Fidelity: A 65-year-old couple retiring in 2017 can expect to spend an average of $275,000 on medical expenses throughout retirement. This is up from $260,000 in 2016, so one can only imagine how staggering this figure will become for those retiring a few decades from now.

 

10. What’s this I hear about investing my HSA dollars?

An health savings account is an excellent savings vehicle for healthcare costs during retirement, but few people have discovered that they can maximize their account’s long-term savings potential by investing their contributions in stocks, mutual funds and other investment vehicles. Studies show that HSA holders who take advantage of investments often have substantially higher account balances. Devenir reports that the average balance of an HSA investment account is six times larger than a non-investment holder’s average HSA balance. Over time, the savings advantage continues to multiply: The Employee Benefit Research Institute found that HSA investment accounts opened in 2005 had an end-of-year balance in 2016 that averaged $31,239 compared to average balances of $7,233 in accounts without investments.

 

11. What does WEX Health have to do with HSAs?

Through our WEX Health Cloud platform and our vast network of partners, WEX Health is currently powering more health savings accounts than any other HSA platform in the country.

 

We provide a variety of user-friendly tools to HR professionals, benefits leaders and consumers that empower them to find ways to save money and control healthcare costs with HSAs and other consumer-directed healthcare accounts.

 

For consumers: With the WEX Health Cloud Consumer Portal, Mobile App and WEX Health Payment Card, consumers have the ease of paying for their out-of-pocket healthcare expenses in a quick and efficient manner. Not only can they use the app to check available balances, view HSA transaction details, make contributions and take distributions, but also they can now conveniently log in using Touch ID. Consumers can also simply swipe their WEX Health Payment Card, and the funds are automatically deducted from their HSA for payment.

 

For employers/HR pros/benefits leaders: WEX Health Cloud was designed to make things easier for employers, not harder. With our WEX Health Cloud Employer Portal and Employer Dashboard, employers and benefits professionals can gain access to an overview of employees’ healthcare spending and saving habits. As of November 2017, the dashboard also includes an innovative new method for assessing an employee base’s ability to pay for out-of-pocket expenses through the Health Financial Viability Index. This data is a key indicator of employees’ financial health and helps employers gain visibility into how their employees are spending their HSA dollars, so they can select plans that best fit their needs. The new HSA Advance functionality gives employers the option to offer employees the ability to “borrow” from their future HSA contributions while providing flexibility in employer management of the program.

 

Today’s workers and employers are utilizing HSAs more than ever. We tell you why on

What You Need to Know About Your HSA at Tax Time

What You Need to Know About Your HSA at Tax Time

02/19/2018

 

While many of us are already planning how we’ll spend our tax refund, we have to get our returns filed first. Before you decide to spend it on a vacation or your next remodel project, how can you invest your money to go further and help you tackle the rising cost of healthcare? In this post, we offer a suggestion along with a few other things that health-savings accountholders should keep in mind during tax season:

 

HSA contributions and distributions are non-taxable—unless you withdraw money to pay for something other than a qualified medical expense. If this is the case, you will have to pay an additional tax of 20 percent on the taxable portion of your distribution. You will calculate this tax amount using Form 8889 and will need to report the taxable amount on the “other income” line of your tax return, writing “HSA” beside it.

 

You can direct-deposit your refund into your HSA.

 

The average tax return last year was $3,120. By directing your refund to deposit directly into your HSA account, you’ll be ahead of the game for saving for medical expenses in 2018—or for healthcare expenses during retirement. (The annual HSA contribution limit for individuals with single medical coverage in 2018 is $3,450.) While this may not be the most exciting use of your tax refund, it may be among the wisest, especially when planning for retirement, as retirees who take money out of an IRA or 401(k) to pay for medical expenses will be taxed on these withdrawals. When they pay medical bills from an HSA, however, they will never be taxed. E-filing and selecting the direct deposit option is also the quickest way to get your return. Ninety percent of returns that are filed this way are received within a few weeks, while mailing in a paper return can require a six- to eight-week wait.

 

You will need to file a Form 1099-SA if you’ve taken money out of your HSA for any reason.

 

To report distributions from an HSA, you must file this form, which the custodian of your HSA is required to file and send to you. The form essentially notifies the IRS that money has left your HSA account. Because the government will also want to be sure you’ve spent any money you’ve withdrawn from your account on qualified medical expenses, this is the form where you will note whether or not you’ve held up your end up the HSA bargain with the government, so to speak.

 

You will also need to file Form 8889 to verify that you spent your distributions on qualified medical expenses.

 

If you made contributions to, or received distributions from, an HSA in 2017, you will also need to attach Form 8889 to your tax return. On this form, you will report these deposits and withdrawals (including those made on your behalf or by an employer) and determine your HSA deduction and the amounts you must include in income. Form 8889 will also help you figure the tax you will owe if you withdrew money from your HSA to pay for things other than qualified medical expenses.

 

On the subject of tax returns, the Internal Revenue Service urged taxpayers again this week to watch out for erroneous deposits from the IRS in their accounts. Following a breach of tax practitioners’ computer files, scammers have now filed several thousand false returns, using taxpayers’ real bank accounts for the deposits. The taxpayers who receive the deposit then receive an automated call purported to be from the IRS. According to the IRS, “Thieves are then using various tactics to reclaim the refund from the taxpayers, and their versions of the scam may continue to evolve.”

 

Americans have until April 17, 2018, to file their 2017 tax returns—this year, we get two extra days because April 15 falls on a weekend and April 16 is Emancipation Day, a legal holiday recognized in Washington, D.C.

 

To determine how much you should contribute to your HSA each month, read this post by Jason Cook, WEX Health’s vice president of healthcare emerging market sales.

How Much Should You Be Contributing to Your HSA

How Much Should You Be Contributing to Your HSA?

01/29/2018

by Jason Cook

 

How much should I deposit into my health savings account each month?

 

The short answer: The maximum prorated amount permitted by the IRS; if that’s financially viable.

 

The slightly longer answer: If you’re covered by an individual consumer directed health plan (CDHP), the IRS allows you to put as much as $3,450 per year into your health savings account (HSA). If you’re contributing to an HSA, and on a family CDHP, the maximum amount that you can contribute is $6,900 per year.  If you’re 55 or older, you can contribute an extra $1,000 annually for a total of $4,450 or $7,900 for account holders on a family plan—with catch-up contributions accepted at any time during the year in which you turn 55.

 

These HSA contribution limits are new for 2018 and just slightly higher than in 2017—$50 more for self-only coverage and $150 more for those on a family plan. (Refer to our blog post for an explanation of all of the IRS’s changes to contribution limits on health savings accounts and high-deductible health plans in 2018.)

 

HSA holders are advised to deposit the maximum amount each year because the dollars going into these accounts are tax advantaged. Contributions made to the HSA are not taxed, earnings on interest and investment gains are not taxed and distributions for qualified medical expenses, taken today, or at any point in the future, are not taxed- The triple tax advantage!  Further, balances roll over at the end of each year, can be taken from job to job, and even into retirement.  This is the portability benefit that ensures account holders are able to save long term for future medical expenses.

 

One oft-cited estimate from Fidelity: A 65-year-old couple retiring in 2017 can expect to spend an average of $275,000 on medical expenses throughout retirement. This is up from $260,000 in 2016, so one can only imagine how staggering this figure will be for those who will be retiring a few decades from now.

 

Monthly cash flow is certainly a concern for all and if you’re uncomfortable contributing the IRS annual max to your HSA through pre-tax payroll contributions, contribute the maximum amount that you are comfortable with. An often overlooked benefit that an HSA affords is the ability to contribute post tax dollars and take an above the line deduction; essentially reducing taxable income for every post tax dollar that’s contributed to the HSA.  Further, account holders have up until tax filing of the following year to make these post tax contributions for the previous year.

 

At first glance, contributing $3,450 or $6,900 to an HSA in one year may sound unimaginable.  But when taking into account the premium savings of a CDHP, compared to a traditional health plan, plus tax savings gained through contributing to an HSA, it becomes more realistic.

 

Need help determining how much you should set aside in your HSA each month to reach your retirement savings goal? WEX Health provides a free HSA Goal Calculator that will help you determine the right amount for you, taking into account your health plan coverage type, deductible amount, number of years before retirement, monthly healthcare expense and more.

 


Jason Cook WEX Health

Jason Cook

Vice President, Healthcare Emerging Market Sales, WEX Health

WEX Health is an organization with a mission to simplify the business of healthcare and healthcare payments. As part of this mission, Jason Cook is focused on health savings account (HSA) growth across all verticals and partner channels.

The Secret to Maximizing HSA Account Savings in the Long Term

The Secret to Maximizing HSA Account Savings in the Long Term

 01/18/2018

 

An HSA account is an excellent savings vehicle for healthcare costs during retirement, but few people have discovered that they can maximize their account’s long-term savings potential by investing their contributions in stocks, mutual funds and other investment vehicles.

 

While only 4 percent of HSA participants leveraged investments in 2017 (per the Midyear Devenir HSA Market Survey), 16 percent of all HSA assets, or $6.8 billion, were invested last year. This represents a growth of 44 percent year over year—and an enormous untapped opportunity for account holders, investment firms and the healthcare benefits market.

 

Studies show that HSA accountholders who take advantage of investments have substantially higher account balances. As reported by the Employee Benefit Research Institute (EBRI), HSAs opened in 2016 with an active investment account ended the year with an average balance of $5,197 compared to an average of $970 in HSAs with no investment account. Over time, the savings advantage continues to multiply, as evidenced by the performance of more seasoned HSAs with an investment account. Those opened in 2005 had a 2016 end-of-year balance that averaged $31,239 compared to average balances of $7,233 in accounts without investments.

 

Want to know how to talk to your employees about HSAs and FSAs? Click here to read our blog about how to communicate the value of consumer-directed healthcare accounts.

 

To keep up with the latest news on consumer-directed healthcare, follow WEX Health on Twitter.

 

WEX Health guest blog Bill Stuart HSA Enrollee Checklist

HSA Enrollee Checklist

1/08/2018

by William Stuart

 

If you’ve enrolled in HSA-qualified medical coverage for the first time, your work is only half-done! This checklist can help ensure that you get the most out of your new coverage.

 

  1. Make sure you’re HSA-eligible. Refer to IRS Publication 969 [https://www.irs.gov/pub/irs-pdf/p969.pdf] for more information. The most common situation that makes you ineligible to open and contribute to an HSA, even when you’re enrolled in an HSA-qualified plan, is enrollment in any part of Medicare or your own or your spouse’s participation in a traditional health FSA.

 

  1. Open an HSA. If you have employer-based coverage, then your employer may send enough information directly to its chosen HSA administrator to set up the account. Be sure to check with your benefits office. You may have to complete a paper application or enroll online.

 

  1. See whether your employer offers a limited-purpose health FSA. You can remain eligible when you participate in a health FSA that reimburses dental and vision expenses only. This option may make sense if you need funds early in the year (you can spend your entire annual balance at any time) or if you want to maximize tax savings or preserve HSA balances. These are annual accounts, which means that you may forfeit unused balances. Some employers offer limited-purpose health FSAs to their employees enrolled in HSAs, while others don’t. See whether this is an option, and determine whether it makes sense for you.

 

  1. Set up payroll deductions. The best way to build your HSA balance is through regular deposits. Many people start by contributing the difference in premium between their old coverage and their new plan(s). Some who can no longer contribute to a health FSA divert those elections to their new HSA(s). In both cases, the contributions merely reroute money from one pre-tax deduction to another, so that your net paycheck doesn’t decline.

 

  1. Name a beneficiary who will inherit your balance. You may have completed this step with paper or online enrollment. Be sure you name someone. If you designate your spouse as the beneficiary, then the HSA passes intact as a tax-advantaged account to your spouse. If you name anyone else, then the account is liquidated before being passed to the beneficiary, who may incur a tax liability.

 

  1. Set up online access. Your HSA administrator offers an online portal through which you can manage your account, track deposits and withdrawals, monitor debit card activity, and manage investments (which you may begin to make after your account reaches a certain cash balance).

 

  1. Check for fees. Read your account documents, which are probably posted online. Some administrators automatically send monthly paper statements and may charge a fee for this service. You can provide your email address to receive statements electronically at no charge. You may be able to set up notifications whenever your administrator receives a deposit or you use your debit card.

 

  1. Download your HSA mobile app. You can have instant access to your account activity on your smartphone. It’s a great way to stay connected to your HSA and provides real-time information wherever you are (for example, in line at the pharmacy) and whenever you need it.

 

  1. Manage your pretax payroll contributions. You can change your contributions prospectively during the year. See your employer for details. If you need more money to reimburse an unexpected expense, then you can increase your contribution. If you have accumulated a sufficient balance and want to reduce or stop your contributions to increase your paycheck, you can do so (note this isn’t recommended as it’s tough to start again).

 

  1. Decide how you want to use your HSA. Many people use their HSAs as they did a health FSA, making regular withdrawals to fund all eligible expenses. Some consciously decide to become HSA savers, either by contributing up to the maximum allowed ($3,450 for self-only coverage and $6,900 for family coverage in 2018, plus an additional $1,000 if age 55 or older) or by not reimbursing eligible expenses immediately. It’s possible for many HSA owners, particularly those who begin in their 20s or 30s, to build a six-figure HSA balance to spend in retirement on Medicare premiums and out-of-pocket medical, dental, and vision expenses.

 

  1. Remain engaged as a consumer. You assume additional financial responsibility when you’re covered on an HSA-qualified plan. You’re spending your own money from your HSA to cover many expenses. You can preserve your funds without impacting the quality of your care if you shop for price and quality (most insurers have tools to help), ask more questions of your doctor (“Would every doctor recommend the same course of treatment, or might others suggest an alternative treatment?”) and consider the site of service (retail clinic versus Urgent care center versus emergency room) when making treatment decisions. Your job isn’t to practice medicine, but rather to apply to your medical care the same principles that you consider when you buy other complex consumer products like a mortgage, vehicle, or life-insurance policy.

 

That’s it. The list isn’t onerous. And many of these items are one-and-done activities that you don’t need to think about again. The key to success with an HSA is to understand how to use your account, both mechanically and strategically. In time, most HSA owners accumulate balances, as contributions exceed distributions. This gives them a sense of security, with less fear of a sudden high medical expense – and potentially the ability to enter retirement with additional assets.


William Stuart

William Stuart

Director of Strategy and Compliance at Benefit Strategies

William G. (Bill) Stuart is director of strategy and compliance at benefit Strategies, LLC, an independent third-party administrator located in New Hampshire. An expert on Health Savings Accounts, he is a member of the American Bankers Association HSA Council. You can check his biweekly blog at www.benstrat.com/hsagps.



What Employees Need to Know About Open Enrollment and Their HSA and FSA Dollars at Year’s End

What Employees Need to Know About Open Enrollment and Their HSA and FSA Dollars at Year’s End

12/4/2017

 

If you’re an employer or benefits administrator, it’s likely that you’ve received your fair share of questions from employees this fall about coverage adjustments during open enrollment. Some of those employees who already have tax-advantaged health savings and flexible spending accounts are also probably asking for clarification on what to do with the sums in these accounts at the end of 2017 and whether or not to continue with their plans.

 

Now is the ideal time to help employees understand how these universally underutilized accounts work and what makes them so valuable. It’s particularly important to educate employees about their flexible spending and health savings accounts in their first year (or during the first year that a company has made an HSA or FSA available) and during the first two open enrollment seasons. Here are the key messages that every employee needs to hear about HSAs, FSAs and open enrollment at the end of the year:

 

All HSA dollars roll over at the end of the year; most FSA dollars won’t

 

While there are many similarities between HSAs and FSAs, some of their most important distinctions arise at the end of the year. Most important, HSA balances can—and ideally will—stay and continue to grow, rolling over into the next year. On the other hand, FSA balances are largely “use it or lose it” by year’s end. Since 2013, however, the IRS has permitted FSA accountholders to carry over $500 annually for expenses in the next year. (Prior to 2013, any unspent funds reverted to the employer’s coffers at year’s end.) Employers can now either allow employees to carry over the $500 to the next year or to spend the remaining funds during a grace period that lasts until March 15 of the following year.

 

Further, employees can change how much they contribute to their HSA at any point during the year, but can only adjust their contribution amounts to FSAs during open enrollment or with a change in employment or family status. The bottom line: HSAs are for saving money for healthcare expenses, and FSAs are for spending it. HSAs are only for employees with high-deductible healthcare plans, while employers can make FSAs available to any employee.

 

Opt for an HSA during open enrollment to save for long-term healthcare expenses

 

HSAs are widely misunderstood. Many people think that these accounts are designed primarily to pay for out-of-pocket medical expenses in the near future (as is the case with FSAs). But the long-term savings value of HSAs is what makes them the most valuable, and during open enrollment, they should be presented to eligible employees as an important part of saving for future medical expenses and retirement.

 

According to a new report from the Employee Benefit Research Institute (EBRI), two-thirds of account holders ended 2016 with positive net contributions, and over 90 percent of HSAs with individual or employer contributions in 2016 ended the year with funds to roll over for future expenses. EBRI’s report also found that the average HSA balance among account holders with individual or employer contributions at the end of 2016 was $2,532, up from $1,604 at the beginning of the year.

 

In 2018, contributions to HSAs will be capped at $3,450 for individuals or $6,900 for families, up from $6,750 in 2017.

 

Opt for an FSA during open enrollment to cover short-term health expenses

 

A flexible spending arrangement, which employers offer to employees at their discretion, can help cover expenses not covered by an employee’s health plan, including deductibles, copayments and prescription costs.

 

In 2018, contributions to FSAs will be capped at $2,650, $50 more than the limit for 2017.

 

More important end-of-year HSA tax information

 

Not all HSA contributions have to be made by Dec. 31 for an employee to claim a tax deduction. Employees and employers can make contributions to an HSA up until April 16, 2018, for 2017.

 

Further, as long as an employee was eligible to contribute to an HSA as of Dec. 1, they are considered to be eligible for the whole year and can still make a maximum contribution for the full year. However, they must remain eligible for an HSA through Dec. 31, 2018. If they don’t, they will have to include the amount over-contributed in income and pay taxes and a 10 percent penalty on it.

 

How should employers communicate the value of FSAs and HSAs to employees? Find tips and ideas in our two part series here and here.