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Blue @ Work

FSA, HSA, HRA: Help your employees save on health insurance

*This article was updated September 2020.

As an employer who cares about the whole health of their employees that means making sure they have the right resources to take care of their financial health.

With various health insurance savings accounts, your employees can take charge of their finances. These accounts, like a health savings account (HSA), health reimbursement arrangement (HRA) or a flexible spending account (FSA), can assist your employees in proactive budgeting and planning for upcoming costs. All this planning makes them smarter health care consumers, which helps your bottom line.

These accounts are used with consumer-driven health care (CDHC). This may mean offering a health insurance plan with lower monthly premiums in exchange for higher deductibles and out-of-pocket costs. CDHC isn’t going anywhere. And, it’s an essential tool to help manage rising health coverage costs. Almost 74 percent of employers rate CDHC as a crucial part of their future benefits strategies1.

Let’s take a look at some of the options:

Health care flexible spending account (FSA)

This pre-tax benefit FSA account can be used to pay for eligible medical, dental and vision expenses that aren’t covered by insurance. After employees determine how much to contribute to their FSA, they can access the full amount of their account on day one of their plan year and funds are automatically deducted pre-tax. Each year, the IRS sets limits External Site on how much employees can contribute to their FSA. It's important for employees to think through how much they are contributing, because funds need to be used within a specific time period.

Dependent care flexible spending account (DCFSA)

A DCFSA is a pre-tax benefit account that can be used to pay for eligible expenses like preschool, summer day camp, before or after school programs and child or adult daycare. Employees can determine how much they want to contribute, and then choose their preference for payment and reimbursement. Much like an FSA, there are limits to how much an employee can contribute to a DCFSA and the funds must be used within a certain time period.

Health savings account (HSA)

Used in conjunction with a high-deductible health plan (HDHP), an HSA is a pre-tax benefit account that can be used to pay for eligible out-of-pocket medical, dental and vision expenses. An employee determines how much they want to contribute annually (limits are set by the IRS External Site), and if money remains in their account at the end of the plan year, it will automatically carry over. It’s like a 401K for health care. Any balance in an HSA stays with the employee, regardless of changes in employment, insurance carrier or retirement.

Millennials are more likely to choose HDHPs

By 2025, millennials (born between 1981 and 1996) will make up 75 percent of the workforce. And, according to the Blue Cross® Blue Shield® Health of America report External Site titled, "Health of Millennials," this generation has seen a decline in their overall health and well-being as early as age 27 — making them unhealthier than any prior generation to enter the workforce. With this information in mind, it's important to begin tailoring your benefits to meet the needs of this growing employee population.

When given a choice, millennials are twice as likely to choose an HDHP than older employees. There are several reasons HDHPs are popular with millennials. Millennials are:

  • More likely to use health care services less frequently.
  • More comfortable accessing digital tools to take charge of their benefits.
  • More likely to consider costs when making health care decisions, such as seeking the cost of care or a procedure before receiving care.

What's more, millennials are more likely to enroll in HSAs, and nearly doubled External Site their HSA participation between 2017 and 2018.

Health reimbursement arrangement (HRA)

This employee-sponsored benefit account acts like a health care spending allowance. An HRA is a reimbursement account that allows employees to pay for eligible out-of-pocket expenses like coinsurance, deductibles and pharmacy costs up to a set amount.

What works for you

While each type of funding account has its benefits, it's important to know which one or combination will best serve your unique workforce. FSA, HSA, HRA and other consumer-driven health care accounts are a great way to engage your employees in their health and in the financial aspects of health care. By offering them options, your employees can feel empowered to take control and make the most of their spending.

Power of one

When you offer Wellmark Blue Cross and Blue Shield health insurance to your employees, you have one point of contact and a streamlined enrollment and renewal process. Less administrative burden means more time for the things that matter.

Plus, easy-to-use tools, including our secure member site, myWellmark®, make it simple for your employees to see their benefits in action. myWellmark helps your employees access real-life data to influence smart health care decisions by viewing their health care usage from the previous two years to help determine if they need more or less coverage based on their health history and the history of their dependents. They can use the information to compare the amount they're paying for their health care now vs. what they'd pay with a different plan.

Questions? Contact your authorized Wellmark account representative, or email us at blueatwork@wellmark.com Send Email.