Trying to spur greater use of health savings accounts, employers are offering direct payments or other financial incentives to participants so they will open HSAs or increase account balances.
A common approach is for employers to contribute a fixed payment or a percentage of participants' annual deductibles for high-deductible health plans, the only type of plan for which HSAs can be used. The Internal Revenue Service defines a high-deductible plan as one with a deductible of at least $1,350 for an individual or $2,700 for a family.
Less common strategies borrow from consumer behavior research by providing a corporate match to participants' contributions or by adding money to accounts when participants complete certain financial wellness/medical tasks.
"The goal is to make people better stewards of their money and better stewards of their health," said W.P. "Pat" Jarrett, co-founder and interim chief executive of Health Savings Administrators, Richmond, Va., an HSA administrator with $800 million in assets under administration serving 70,000 participants.
Mr. Jarrett practices what he preaches. His company's HSA provides a two-pronged approach of corporate encouragement. It makes an annual contribution of $1,000 for each single employee and $2,000 for those employees with family coverage. A share of the money is contributed every two weeks coinciding with each pay period.
The company also provides a corporate match of up to $500 based on the single employee's contribution and up to $1,000 for those with family coverage.
Corporate contributions are backed up by efforts to explain the medical, investing and tax benefits of HSAs. "The short answer is education," said Mr. Jarrett, who also is a member of the HSA committee of the Plan Sponsor Council of America, Chicago. "You need to educate and simplify the message."
HSAs offer participants a triple tax advantage. Contributions are made with pretax dollars; investment gains within HSAs are tax free; and withdrawals from HSAs are tax free for qualified medical expenses.
For 2018, the IRS allows participants to contribute up to $3,450 for single coverage and up to $6,900 for family coverage; those age 55 and older are eligible for a $1,000 catch-up contribution. Unspent HSA funds roll over year to year.
A survey of PSCA members last year found that 81.2% of plans that had HSAs also provided some financial aid. Contributions based on a single participant or a family plan is the most common form of corporate support, said a report on the survey findings. Of the employers that offered HSAs, 67.4% used this approach while 22.2% made a set amount regardless of family status. Only 4.4% used a wellness incentive, 1.5% offered a corporate match and 4.4% cited "other," said the survey of 255 PSCA members.
"If I were in a plan sponsor role, when a worker enrolls in a qualifying health plan, I would not wait for her/him to make a contribution to the health savings account," John M. "Jack" Towarnicky, the PSCA executive director, said in an email, adding the various strategies depend on the comfort level of benefits executives .
"Instead, I would make a modest, non-elective employer contribution on the first day of qualifying coverage — so as to start the clock with regard to qualifying medical expenses," he said.