HSAs (Health Savings Accounts) Are Not FSAs – Myths and Misinformation Cleared Up
Recently I had a conversation with a wonderful client of mine about adding HSAs to the Employee Benefits Package. I explained what a powerful benefit and financial planning tool they are. She reminded me that they already offer FSAs so they are “all set”. I had assumed she knew the difference. My mistake.
HSAs are Health Savings Accounts. Don’t confuse them with FSA (flexible savings accounts). Totally different animal.
HSA Myth #1: Owners forfeit unused balances at the end of each year.
Fact: Balances are never forfeited and can be used for eligible expenses at any point in the future, as long as there are funds in the account.
Did you know? Fifty-percent of HSA account holders know that they can carry over balances from year to year.1 That means we need to get the word out!
HSA Myth #2: Owners lose their accounts when they leave employment.
Fact: Health Savings Accounts are personal accounts and they’re portable through job changes and into retirement.*
Did you know? Fifty-percent of employees know HSAs are portable.1 Yes, we need to get the word out!
HSA Myth #3: Contribution levels are fixed.
Fact: Account owners can change their pre-tax payroll deduction amount as often as their employer allows throughout the year.**
Did you know? Only 29% of employees know contribution levels can be changed outside of open enrollment.1
HSA Myth #4: Employees can only make contributions to an HSA through payroll deduction.
Fact: Account holders can deposit funds into their HSA via a transfer from their bank account through the online portal, payroll deduction or even personal check.
Only 37% of employees know contributions can be made through multiple methods.1
HSA Myth #5: Employees who don’t open their accounts during open enrollment have to wait until the following year.
Fact: Account owners can open and fund their HSAs as soon as they meet eligibility requirements.
Did you know? Only 22% of employees know they can open an HSA at any time.1
HSA Myth #6: HSA investment options are limited.
Fact: HSA account owners may have access to a robust investment menu, depending on the program.***
Did you know? Only 34% of employees know HSAs offer robust investment options.1
Next step: Let’s discuss if HSAs are right for your company. Book a time below.
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Disclosures, Sources, and Footnotes
Based on results of a Voya Financial Consumer Insights & Research survey conducted with Morning Consult between March 9-15, 2023, among working Americans age 18+ who have both an employer-sponsored retirement plan and a medical/health plan, featuring health savings account owners.
For plan sponsor use only, not for use with participants or the general public. This information is not intended as authoritative guidance or tax or legal advice. You should consult with your attorney or tax advisor for guidance on your specific situation.