Here’s How to Help Your Employees Make the Most of Their HSA

A Health Savings Account (HSA) is an employer-funded spending account that helps employees maintain both their financial and physical health. An HSA can be used to pay for out-of-pocket medical expenses using pre-tax dollars—so it’s a great perk to offer your employees as part of a robust benefits package.
HSAs can be a powerful financial tool to promote employee retention and satisfaction since it can be invested in the market. The average HSA balance for those who invest in the market is $17,926—that’s 7.3 times larger than for non-investment account holders illustrating the broad appeal of this feature.

Many participants access their HSA funds to cover everyday medical expenses while only about 7 percent invest in their accounts with their financial future in mind. While HSAs are useful for covering short-term needs, it’s important that employees recognize that they’re also great tools to prepare for future medical expenses.  What is unused can be used to enhance retirement after age 65.

An HSA can be paired with other retirement accounts to maximize after-tax retirement income. Saving in an HSA for retirement will give your employees a tax-advantaged account dedicated to future medical expenses — allowing them the opportunity to avoid dipping into retirement accounts intended for cost-of-living expenses. This is a smart and efficient way to pay for qualified medical expenses during retirement.  Your employees should understand that HSAs are an excellent tool to boost an individual’s retirement income.
By understanding your employees, you’re better positioned to encourage HSA account holders to start investing in their HSAs—and leverage this benefit for long-term financial success.

How can I more effectively encourage my employees to contribute?

To educate account holders on the merits of their HSA, employers need to customize their approach and communicate in a way that resonates with their employees. That means understanding where they’re at financially, including in their HSA lifecycle, so they can make the most of their account.
Through our research, we’ve identified seven behavioral segments for HSA participants. By tailoring your messaging for each individual segment, you can equip the participant with the information that matters to them most.

It’s important to understand that these HSA behavior segments aren’t personas. Participants can shift from one segment to another, based on their understanding of HSAs, how much their employer contributes to the account, and their financial circumstances.

Check out our infographic to learn about the seven HSA behavior segments:

An image of an infographic titled 7 HSA Behaviors

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The information is for educational purposes only. It is not legal or tax advice. For legal or tax advice, you should consult your own counsel.
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