It is that time of the year again – kids are going back to school, summer vacations are over, and the stores are filling with Halloween decorations. For companies of all sizes, this time of year starts the beginning of the benefit enrollment process for their employees. With 60% of establishments in the private industry offering medical care benefits to their employees, one of these enrollments is usually health insurance. There are many opportunities that Health Savings Accounts (HSAs) represent, and credit unions must be able to inform its business members about to keep them current on cost saving opportunities.
Due to the increasing cost of health insurance, more and more employers are offering a high deductible health plan (HDHP) alongside the more well-known PPO and HMO plans as part of their employee benefits cafeteria plan, with many employers moving to HDHP plans only. Employers are seeing a steady increase of more than 8% annually. Employees who choose the HDHP* qualify to open a tax-deferrable HSA. The movement of consumer-driven health care puts the decision about where to spend the health care dollar back in the hands of the consumer.
The FAQ on HSAs
The difference with an HSA versus a flexible spending account (FSA) or Health Reimbursement Arrangement (HRA) is that the HSA is a consumer-controlled account. With the FSA or an HRA, the employer controls the funds and a third party administers the accounts, often requiring many paper transactions. The money in an HSA is similar to a 401k benefit –it is attached to the employee (not the company), is totally portable, and better yet, funds roll over year-to-year, eliminating the “use it or lose it” aspect of some types of health accounts. The HSA is designed to allow individuals to save for present and future health care costs by allowing them to make pre-tax contributions, roll over funds, and invest the funds in higher interest earning accounts as well as investment accounts. Depending on certain restrictions, the individual can also roll over funds from an IRA, FSA, or HRA. The HSA lends itself to paperless transaction as well.
October marks the start of the enrollment decision-making process, and it is essential for credit unions to provide an easy way for their business members to enable their employees to sign up for an HSA. There are three keys to make this process easy and profitable.
The first key is to provide an online enrollment capability that allows the new account holder to easily go online, find information on an HSA, enroll for the account easily, and receive information that quickly tells them the status of their account and the steps following the account opening process. Today, financial institutions need to streamline the online account opening process that enables employees to fulfill an online application 24x7, fulfill all regulatory requirements, and provide the option to obtain an online signature all in less than fifteen minutes. The most important step is welcoming this new member to the credit union and notifying them when their application is received and the account has been opened. The consumer is increasingly being faced with online scams and phishing, and it is important to them that they know that all transactions are legitimate.
HSA Education & Information
The next key is to provide the member with education and information on how they are to use this account. The member will typically not understand an HSA, especially if they have had an FSA in the past. Providing the new member with information on the HSA will be extremely important – as will having customer service representatives familiar with answering HSA-related questions. Online education about the product is preferable, since this is also the avenue new members will use to view their account information as well as retrieve their statements.
“Welcome to the Credit Union!”
Lastly, as the new member is being welcomed to the credit union as an HSA participant, it is a great opportunity to provide them information on the other financial services you provide. Data suggests that HSA customers will have four or more services or accounts with their HSA financial institution.
*The HDHP must meet the requirements to enable it to be qualified for a HSA.