A new year is upon us, and with that comes newly opened health savings accounts started by your clients’ employees. However, many of these new HSA account holders don’t understand how to make the most of their accounts. Now is the time to guide them in the right direction, which will in turn help their employees maximize their new savings tool as soon as possible. Here are a few tips to pass along:
1) Activate your HSA debit card. An HSA debit card makes paying for healthcare convenient by allowing owners to make payments at the doctor’s office and local pharmacy directly from their HSA funds. Similar to a normal debit card, many health service providers accept HSA card information over the phone or online.
2) Add a beneficiary. A new HSA account holder should add a beneficiary to ensure savings reach loved ones in case of the owner’s death. If the account owner dies, the spouse beneficiary can assume ownership of the account as their own without tax penalties or receive a taxable lump-sum distribution. All other beneficiaries receive a taxable lump sum. Inevitable mortality may be a difficult subject to discuss with clients, but it’s important that HSA members know and prepare.
3) Contribute to your HSA aggressively and immediately. Encourage employees to zealously put money into their accounts, as it will help them reap maximum tax savings on payroll deductions and/or one-time contributions. The money in an HSA is protected from taxes and accrues tax-free interest. HSA account holders can look to begin depositing the money they save from their low-cost, high-deductible premiums into their HSA. They can also work with their employer to set predetermined withdrawals from their paychecks that are deposited directly into their HSA.
4) Copays aren’t required at the time of service. With an HSA-powered health plan, payment is not required at the time of service. The doctor’s office will submit the expense to the account holder’s health plan provider for services provided. Once the claim has been processed, HSA members will then receive an invoice from their doctor with the allowed charges negotiated by their health plan provider. Payment plans are often available for the invoiced amount.
5) Don’t delay health needs. New HSA owners may feel compelled to avoid the doctor until they have sufficient funds in their HSAs. Employees don’t have to wait until they build a balance in their account to address their health needs because they can easily reimburse themselves later for their current medical expenses. Since there is no time limit with an HSA to reimburse themselves for qualified medical expenses they pay out-of-pocket, employees can accumulate the reimbursable amount until they reach a determined goal, all while building tax-free earnings. HSA account holders should save receipts, invoices and EOB’s in the event the IRS ever requires this documentation to be provided.
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With these HSA hacks in mind, your clients’ employees will be ready to make the most of their HSAs, and ultimately spend intelligently and save wisely on their healthcare.
Neeleman is founder and vice chairman of HealthEquity.
