When it comes to conversations with employer clients about building an employer-sponsored health savings account program, agents and brokers tend to hear a recurring response — some clients just don’t see the value in offering an HSA program to their employees.
From there, the conversation often shifts to the financial benefits for the client earned through FICA tax savings. Savvy agents and brokers educate clients on how, by setting up an employer-sponsored HSA program and providing employees with an easy way to make pretax HSA contributions, they’re lowering their company’s FICA tax liability — and ultimately saving more money for their businesses the more their employees contribute to their own HSAs.
The FICA savings value proposition often is enough to convince clients to give an employer-sponsored HSA program more thought. But for those who need additional convincing, HSA programs provide much more than just tax savings.
Another increasingly important but often overlooked benefit of offering an employer-sponsored HSA program is the ability to leverage the program itself as a critical recruitment and retention tool. Agents and brokers can create win-win scenarios by helping their clients understand that an HSA program offers more than just tax savings alone.
Employee Benefits Make A Difference
Many employer clients don’t recognize that the direct influence their employee benefits have on their ability to recruit and retain top talent is greater than ever. Clients also don’t recognize that the landscape of what employees have come to expect when it comes to their benefits has rapidly evolved, particularly this past year when dealing with the continued challenges COVID-19 has presented.
Recent industry trend research conducted by Wellable frames up a telling story when it comes to just how much employee benefits impact decision-making, with 70% of employees defining benefits as either the most important or a very important factor in accepting or continuing a job.
And while the research shows that clients are listening, with 66% “significantly influenced” by their desire to create competitive benefit packages, many still seem to be missing the mark when it comes to adding an HSA program.
Going Halfway Isn’t Good Enough
Clients often believe that simply offering an HSA-eligible high-deductible health plan is enough to attract and retain employees. In reality, it’s only going halfway and can become a sticking point for recruitment and retention efforts.
Research shows that clients who take this approach see low employee buy-in and even lower HSA enrollment numbers compared with those who offer an HSA program, especially those who make a contribution to employee HSAs. When employees are left to their own devices to find and open an HSA, usually they simply don’t do it. And for prospective employees, that may make the difference between accepting or declining an offer. Clients and their employees both end up missing out on sizable tax savings and many other benefits, and clients’ recruitment and retention efforts stand to suffer real setbacks.
HSA Programs: An Expectation And Not An Option
The continued shift to a more consumer-driven health care model has only been amplified by COVID-19 and employees facing steadily increasing cost-sharing.
This shift plays directly into the growing demand for HDHP options paired with employer-sponsored HSAs. More and more, employees of all kinds are coming to expect an HDHP/HSA option to help them better control their costs and take a more active role in their health care. On top of this, an increasing number of employees also expect their employer to make some type of contribution to their HSA. Employer HSA contributions alone can be a make-it-or-break-it factor for recruiting and retention.
The latest Devenir research projects HSA-eligible health plan enrollment will continue to grow by nearly 25% annually and that HSAs are on pace to exceed 36 million by 2023.
Clearly, clients can’t ignore the importance of offering an HSA program. And, agents and brokers can’t ignore the importance of helping clients build the best HSA programs possible with the best HSA partner.
Positive Trends To Help Influence Clients
While some clients still struggle to see the value of an employer-sponsored HSA program, there are many other clients who do see that value. These clients either have made or are planning to make the necessary adjustments.
More than half of clients agree that employee productivity and morale suffer due to stress about personal financial issues. According to Wellable, 41% of employers plan to invest more resources into improving employee financial health in the coming year. And for employers who already have implemented changes such as adding an employer-sponsored HSA program, 54% have experienced “significantly influenced” ROI.
5 Ways HSA Programs Boost Recruiting And Retention
When set up and implemented correctly, an employer-sponsored HSA program becomes a powerful tool not only for client FICA savings but also for recruitment and retention. Clients will be able to promote their leading-edge benefits to attract and retain the top talent they need to stay ahead of their competition.
Agents and brokers need to help clients understand five key recruitment and retention highlights:
1. Completing the HDHP/HSA puzzle. Offering an HDHP plus an employer-sponsored HSA saves employees money up front on insurance premiums while also providing an easy way for them to open an HSA.
2. Streamlining additional savings, and potentially sweetening the deal. Employees can save even more money by making pretax contributions through payroll deductions — easily accomplished through an employer-sponsored HSA program. If a client chooses to make a contribution to employee HSAs, that further strengthens the appeal to both current and prospective employees. And with current Devenir data showing only 34% of HSAs receiving an employer contribution, the opportunity to differentiate is apparent.
3. Promoting an HSA’s unique “triple tax advantage.” With an HSA, contributions aren’t taxed, funds grow tax free and all withdrawals for qualified expenses are tax free.
4. Showcasing the flexibility and portability employees want. HSA funds roll over year after year and never face a use-it-or-lose-it scenario. Employees own their HSAs and all the funds in their accounts, even with a job change, insurance plan change or even retirement. And HSA funds can be used for a wide variety of health care costs — everything from prescription and nonprescription medications to medical, dental and vision expenses.
5. Providing a unique way to invest for the long term. HSAs can be used to invest for long-term retirement goals, similar to a 401(k), but even more tax advantaged. HSA contributions and earnings can set employees up for a brighter financial future and can even be used for other purposes beyond health care expenses after age 65 without penalty.
Help Clients Build Their Best HSA Program
By understanding all the ways an employer-sponsored HSA program can add value to their clients’ businesses — including boosting recruitment and retention — agents and brokers can effectively educate clients on why they can’t overlook the importance of offering an HSA program to their employees.