When it comes to health benefits, "You don't know what you don't know" is a familiar theme for many employees. Unfortunately,
Health savings accounts (HSAs) are one of the few benefits that can support everyday health while empowering employees to save money for current and future needs; However, lack of account literacy can be a
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Why HSA expense tracking matters
Employees may not realize that it's their responsibility as account holders to track their expenses for HSA reimbursement. Be sure to share this information with them, along with the fact that they can continue to use the account even if they quit their job, retire, or are no longer funding the HSA. As long as there is a balance in the HSA, expenses can be submitted for reimbursement at any time — today, tomorrow or even 10-20 years from now — so encourage employees to track their spending.
Employees who exhaust their HSA balance every year should track funds to ensure they're accounting for all purchases and maximizing their savings. Conversely, employees who are focused on saving and investing should still track eligible healthcare expenses so they can easily reimburse themselves in the future when extra, tax-free money might benefit them financially.
Regardless of which camp your employees are in, tracking eligible HSA expenses can help an account holder avoid paying a
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Leave no stone left unturned
The scope of HSA eligibility is broad and supports employees of all ages and with very diverse needs. Consider creating a "What's covered?" cheat sheet for employees or directing them to
Make sure employees also understand that they can save an estimated 30% when they use tax-free HSA funds to purchase everyday items like cold and flu medications, pain relievers, first-aid supplies, eye care, menstrual care products and sunscreen. This can be an effective way to save more money on products they already buy and use regularly.
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Putting money in employees' pockets
The ultimate in smart money moves is helping employees put more money in their own pockets, and HSAs are an excellent way to accomplish this by helping them stretch their healthcare funds and reduce their taxable income.
As the April 15 tax filing deadline nears, take time to remind employees about these HSA features that can support their short- and long-term financial goals.
- Ability to make a delayed contribution for 2025 (a.k.a., a prior year contribution). One of the most overlooked HSA benefits is the ability to make contributions for the prior tax year up until the tax filing deadline. In other words, employees can contribute to their 2025 HSA up until April 15, 2026, making this an easy way to reduce taxable income even after the calendar year has ended.
- Anyone can contribute to an employee's HSA. Employees may hesitate to open an HSA if they are unable to contribute the full amount on Day 1, so it's important to communicate that HSA contributions can be made at any time, by anyone (account holders, employers, and others). And remember, as a general rule, every $100 contributed can result in roughly $30 in tax savings, making small, consistent contributions surprisingly powerful.
- Triple HSA tax advantage. The triple tax advantage of HSAs — reduce taxable income, save by using tax-free funds, and banking funds for retirement — is a powerful advantage for employees, and it can help them safeguard their long-term health and financial needs, which typically increase as we age.
Employees shouldn't feel overwhelmed or uncertain about using their benefits, and with clear, consistent education, HR teams can ensure that tax-free HSAs are delivering maximum benefit to employees — regardless what their health and financial needs are.
