Employer contributions to a Health Savings Account are a valuable way to encourage employees to enroll in a High Deductible Health Plan (HDHP) with an HSA. If your organization is considering offering an HSA with an employer contribution, it is vital that you consider if your benefits administration technology can accommodate the intended contribution strategy. Exploring the opportunities within your Ben Admin will inform how your organization will handle contributions for new hires, qualifying life events, and annual renewal enrollments.
BTR has vast experience with employer contribution strategies that work well with Ben Admin technology -here are a few strategies that have proven successful.
- Per Pay Contributions – This is typically the most straightforward strategy and reduces concerns with pro-rating employer contributions for new hires during the year.
- Monthly/Quarterly Employer Contributions – This strategy is ideal for HSA changes effective on the 1st of the month/quarter. Typically, the employee receives the employer contribution on the effective date after the enrollment is completed. We recommend verifying that the ben admin system will support this strategy since it is likely a different schedule than employees’ payroll schedules.
- One-Time Annual Contributions – This strategy works well at Annual Enrollment because it funds employees’ HSA accounts “up front” at the beginning of the plan year. However, it will be essential to consider how your technology will pro-rate employer contributions for new hires and any mid-year adjustments.
- Employer-Match Per Pay Contributions – Typically, with this strategy, the employer matches a certain percentage of the employee contribution up to a maximum amount. Not all systems can handle a per-pay employer match strategy, so it is recommended that employers check with the Ben Admin service team before implementing this strategy.
- Tier-based Contributions – An example of this strategy could include a $1,200 annual employer contribution for single HDHP coverage and a $2,400 annual employer contribution for family HDHP coverage. In this scenario, employers will want to consider how to handle the funding mechanisms (monthly vs. annually) for employees who have a life event during the year, which could result in moving HDHP tiers.
- Wellness-based Contributions – This strategy entices employees to participate in wellness endeavors to earn employer contributions to their HSA. Contributions are usually based on external factors, such as tobacco status or fitness event participation, so employers should verify that the ben admin technology can manage these factors to execute employer contributions successfully.
Employers looking to offer an employer-funded HSA plan should connect with the Ben Admin technology service team and any other impacted systems to determine if and how the technology will support the strategy. The goal of technology should be to avoid manual workarounds and costly mistakes. The Henderson Brothers’ benefits practice is available to help with these considerations and advise on technology recommendations for HSA Employer Contribution strategies.
If you are looking for assistance in leveraging HR tech for your business, please contact Maggie Boucher, senior consultant, at (412) 754-3245 or email [email protected]
Please note that the information contained in this posting is designed to provide general awareness in regard to the subject matter covered. It is not provided as legal, medical, or tax advice, nor is it intended to address all concerns in your workplace or for public health. No representation is made as to the sufficiency for your specific company’s needs. This post should be reviewed by your legal counsel or tax consultant before use.