Pub. 5 2015-2016 Issue 4

O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S - H E L P I N G C O L O R A D A N S R E A L I Z E D R E A M S January • February 2015 9 Hawaii, state healthcare mandates require employers to offer health plans that do not meet the qualifications for pairing with HSAs. Consequently, the questionable survival of HSAs influenced some financial institutions to avoid offering HSAs. However, when the bulk of the ACA went into effect and the state and federal healthcare exchanges opened, these exchanges began offering—you guessed it—HDHPs that can be paired with HSAs. HSAs have weathered more than a decade of naysayers pre- dicting their extinction and trying to make them go away, yet HSAs have grown rapidly both in the number of accounts and in dollars every single year. The Great Recession had little or no impact on HSAs’ growth, and neither has any other economic downturn since then. As a result of the widespread use of HSAs today, it is safe to say that they are “Honestly Staying Around.” HSA = Here’s Something Awesome So what if your organization is already offering HSAs or is committed to getting into them? You should be marketing and promoting HSAs to your customers for several reasons. • HSAs are AWESOME! HSAs can become a true cornerstone that assists your customers • with skillfully saving for retirement and paying for their current and futuremedical expenses. • HSAs offer extended value. Many organizations will continue to avoid offering HSAs creates a great op- portunity to attract cus- tomers who are seeking a HSA and can benefit from your broader product and services suite. • HSAs are flexible. HSA bal- ances can accumulate and tax-free distributions can pay for qualified medical expenses that are not covered by their health insurance plan. Covered expenses include, but are not limited to, vision and dental costs that most traditional health care plans do not offer. • HSAs benefit customers 65+. HSAs also can be used to pay for certain premiums of individuals over age 65 or the HSA can be treated like an IRA in retirement. These benefits are awesome incentives that can encourage your customers to let their HSA savings grow, even if they have to use HSA assets each year for medical expenses. Having lower premiums with an HDHP allow individuals to save and accumulate balances in the HSA instead of that money going toward higher traditional healthcare insurance premiums. HSAs Offer Account Owners a Triple Tax Advantage: 1. Contributions reduce taxable income 2. Earnings have tax free growth 3. Qualified distributions are not taxed HSA = Health Spending Account While “health spending account” is not what HSAs technical- ly are called, they certainly are used in this way by themajority of individuals who currently have them. In 2013, only about 15% of HSAs were funded to the statutorymaximum. However, roughly 80% of HSAs hadmoney come out of them. The majority of HSA owners are using HSAs on a regular basis, and that is just fine. Periodic use of these assets is a part of why they were created. Many people useHSAs as glorified flexible spending accounts and only fund the HSA with as much money as they think they will withdraw in that given year. Many times, this scenario occurs because consumers haven’t been properly educated about HSAs and think they will lose their remaining balance at the end of the year, if they do not use all of the assets. The “use it or lose it” possibility can occur with flexible spending accounts and cafeteria plans, but NOT with HSAs. Your customer’s money stays in the HSA and remains under the control of the HSA owner. So while using HSAs as spending accounts is not a bad thing, it is certainly an area where your customers could use more education. According to the Employee Benefits Research Institute, 43% of people enrolled in HSA-eligible high deductible health plans (HDHPs) had not opened an HSA. This means that these indi- viduals are really only getting the lower premium of the HDHP, but missing out on the benefits of paying for medical expenses and deductibles with an HSA. In effect, they are seeing most of the downsides of the HDHP/HSA offering, without most of the upsides.1 HSA = Having Something Available Your organization has a vital part in helping your customers better manage the money they spend on healthcare costs. With millions of individuals migrating to high deductible health plans (HDHPs), the need for your bank to offer HSAs continues to grow. People are enrolling in HDHPs and are expecting that their trusted financial organization offers HSAs. Your customers’ growing needs for this product is the critical element that those not offering HSAs are missing.  HSA  continued on page 10