by WEX Benefits
The financial wellness of your employees is a contributing factor to their success and happiness. And it also impacts your company’s productivity. According to a WEX Health report, nearly 20 percent of employees reported that they lacked confidence in their ability to achieve long-term financial goals.
Health savings accounts (HSAs) can help, but the majority of participants use HSAs as short-term savings tools. Because the big financial picture is so important to your employees, we’ve outlined three easy ways you can help them maximize the retirement-planning potential of their HSAs.
Communicate your HSA’s retirement-planning potential
The average 65-year-old couple is expected to need $351,000 just to pay for healthcare costs in retirement. That’s a big number for your employees to prepare for. Fortunately, HSAs are suited to do just that because of their pre-tax savings potential. By maxing out HSA contributions before contributing to another retirement savings account, employees can focus on the present and the future.
Your employees can also build up their savings faster by investing their HSA funds. Accrued interest on HSA funds will generate revenue over time, but invested funds can grow at a much faster rate.
Offer a limited FSA
One of the big differences between a medical flexible spending account (medical FSA) and an HSA is that all HSA funds carry over from one year to the next, which is why HSAs are effective as a retirement-planning tool. medical FSA funds must be spent by the end of the plan year unless the FSA includes a carryover (the maximum-allowed carryover is $550).
While an HSA can’t be paired with a general-purpose medical FSA, your employees can pair their HSAs with limited FSAs, which cover dental, vision and preventive care expenses. When you offer both accounts and your employees participate in both, they can treat their limited FSA as a short-term savings tool (since all funds don’t carry over), which makes it easier for them to build up their HSA balance.
Promote tools for investment and goal-setting
Simple tools and automation can make big goals seem easier to achieve and will help them level up from HSA spenders to effective HSA savers and investors. For example, our HSA Goal Calculator to help them create a strategic, custom savings plan. And our innovative app lets them sign up for text alerts to receive on-the-go notifications about account activity, investment details, and more.
Would you like to learn more about HSAs? Check out our archive of HSA blog posts.
- 10 HSA and FSA expenses you can buy for under $10
- 2021 HSA contribution limits and 2021 HDHP limits announced