Talking to first-time employees about HSAs? Here’s how to get them on track for financial health

01

Use messaging that resonates with younger audiences

Employees new to the workforce have a lot on their minds, the least of which may be saving for medical expenses. They might associate “savings” with “less money for them to spend now.” They need to understand that unexpected medical expenses can occur, and it’s better to ensure that money is put away and available than to be caught off guard by these expenses later.

We know that employees will have questions about HSAs, so here are some helpful responses you might want to consider.

Employee: Why should I open and contribute to an HSA?

Employer: An HSA can help you cover medical expenses from an unexpected illness, sports injury or accident, such as copays for doctor’s office visits, X-rays, lab tests and more. Things can happen. For example, after a record-low number of sports and recreational injuries reported in 2020 (based on emergency room visits), injuries increased 20% in 2021 and another 12% in 2022, according to the National Safety Council.

One expense you need to budget for when you have your own medical insurance is the deductible. This is the amount of money you must pay before insurance kicks in and starts paying a portion of your medical expenses. The money in your HSA can pay for expenses that apply toward your deductible.

Employee: What happens to the money in my account if I don’t spend it?

Employer: The money in your HSA is yours to keep. It is a bank account in your name, and while you may be making contributions directly through your employer, the money is yours even if you should leave that employer or don’t use the HSA at all because you don’t have any medical expenses. Unlike flexible spending accounts, there is no “use it or lose it” policy associated with HSAs.

Employee: How much should I contribute to my HSA?

Employer: A little in your HSA goes a long way. Even a $500 or $1,000 annual contribution helps you set aside money for unexpected medical expenses when you need it most. Remember, HSA funds accumulate over time, and the money is free from taxes, so you are getting more bang for the buck.

If you have some extra money in your paycheck and want to take full advantage of the tax savings that comes with an HSA, you could contribute up to the HSA maximum ($4,150 for single coverage, $8,300 for family coverage in 2024). If that’s a little out of reach, consider contributing the amount of your medical deductible to your HSA (the 2024 minimum annual deductible for high-deductible health plans is $1,600 for individual coverage and $3,200 for family coverage).

02

Target communications specifically for younger demographics

Employees have a lot to learn when they start a new job, and onboarding information can be overwhelming. Try these tips to improve their experience when talking about health insurance and HSAs:

• Break down messages into smaller chucks so it’s easier for them to digest. Consider a campaign that is separate from general onboarding information to engage them.
• Don’t stop communicating once new hires enroll in benefits. Ongoing communications about how to use and maximize benefits will help to reinforce this important information for younger employees. For example, let them know that, unlike their choice of a health plan, they can change their HSA contributions during the year as they come to understand how the plans work and develop good spending habits.
• Leverage digital communications. In a survey by IBM and the NRF, 75% of Gen Z respondents selected a mobile phone or smartphone as their device of choice, and 25% said they spend more than five hours on their mobile phones every day. These employees are not only accustomed to digital communications, they expect it. Emails, text messages and push notifications can be used to reach younger hires to help them better understand and use their benefits. A communications campaign that involves videos, podcasts and social posts would be engaging to Gen Z employees.

03

Provide scenarios that could help to bring the concept of HSAs to life for Gen Zers

Here are the types of scenarios you might want to leverage in your own communications. Remember, younger employees do not tend to think about medical expenses in the same way as older demographics.

• Scenario One: Watch that curb!
  Imagine you didn’t round that curb as well as you’d hoped, and you and your bike are down for the count. You need to go to the emergency room — luckily, no broken bones. Still, you are faced with an unexpected medical bill, which may surprise you. Depending on the state you live in, CBS News reports that the cost of an emergency room visit can be anywhere from $600 to more than $3,000. While you have health insurance from your employer, you are still responsible for deductibles and co-insurance. Then, there are the costs of fixing your bike; sorry, your HSA won’t cover those.
• Scenario Two: Better make sure it’s not COVID-19 or the flu.
  Your throat’s a little sore and your muscles ache; you know you can plow through it, but your family is looking forward to seeing you for Sunday dinner. Better to stop at urgent care or see if your doctor can squeeze you in for a quick checkup. Even these appointments can be costly. Using an HSA allows you to pay for these visits and tests using pre-tax dollars, making your health maintenance more affordable. Mom will thank you for it once you get the all-clear.
• Scenario Three: There’s a pill for that.
  While you may not be diagnosed with a serious chronic condition that requires regular medication, prescriptions to treat upper respiratory illnesses — along with contraceptives, antibiotics and antihistamines — are common among Gen Zers. Prescription drugs can be expensive, especially if they're needed on an ongoing basis. An HSA can help offset these costs, allowing you to continue your treatment without financial obstacles. Did you know? Twenty percent of “zoomers” have taken a prescription medication in the past 30 days, according to PubMed, as reported by PharmaVoice.