Congress in 2020 untethered HSAs and flexible spending accounts by changing the rules that prohibited account holders from using the funds in their accounts for over-the-counter medicines and other non-prescription health products and services. That change, which is permanent, was done through the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

HSAs are a great option to help employees save for health care expenses since all unused funds can be rolled over from year to year (there is no use it or lose it penalty). HSAs also provide the potential to build a health care savings nest egg, the funds in which can be invested so they can grow.

There is also the much-touted fact that HSAs offer a triple tax benefit:

• Contributions are not subject to federal income taxes;
• Earnings from interest and investments are tax-free; and
• Distributions to pay for qualified medical expenses are tax-free.

Additionally, people over 65 can withdraw funds for any purpose without incurring a penalty, although if not used for qualified medical expenses, they may be subject to income taxes.

Here are some tips to help your employees access HSAs:  

Design a strong plan

HSAs must be tied to a high-deductible health plan and there are certain steps you can take to make them more attractive to your workers.

The HDHP plan should have a lower premium than a traditional plan in order to give your employees affordability and leftover funds to funnel into the HSA.

You can instill confidence by:

• Providing your employer contribution on the first day of the plan year to alleviate concerns about covering the deductible.
• Utilizing a Section 125 cafeteria plan to allow employees to make pre-tax salary reduction contributions.
• Putting in place a matching contribution structure to employees making salary reductions.

Educate and support your staff

Plan your HSA messaging early and way ahead of open enrollment to maximize interest. This should be a year-round educational effort that engages your staff and helps instill confidence in HSAs.

Remember, the messaging should be different depending on the age of your workers. You may need to have different approaches to educating baby boomers compared to Gen Z staff.

Help them make good decisions

You should be able to show your employees at a glance which health plans will save them money. There are tools available to do cost-benefit analyses of how much an employee spends on a health plan and if it was the most cost-effective choice.

The average employee leaves $1,500 on the able in money they could have saved on premiums had they chosen an HDHP, particularly if they don’t use health care services often.

One way to illustrate how much money they may be wasting is to provide claims-based report cards, which show whether or not they made a good choice the previous year ahead of open enrollment.

The takeaway

The goal here is to educate your workers about the power of HSAs and how having one can help them amass a substantial war chest of funds for any future expensive health care needs. If entered into early, an employee can set aside hundreds of thousands of dollars for unanticipated health care expenses.

If you provide support and education, your staff will be more engaged, resulting in them making better health care choices.

The CARES Act includes provision for:

• Extended unemployment benefits.
• Requiring health plans to cover COVID-19-related costs.
• Small Business Administration (SBA) disaster loans.
• Loans for large corporations.

Parts of the CARES Act will likely benefit your organization and employees in some way. Here’s what you need to know:

Extended unemployment

The CARES Act extends unemployment insurance benefits to workers, as long as they lost their jobs due to the outbreak.

Unemployment benefits under the CARES Act also apply to furloughed employees.

Depending on your state, workers will be able to collect both state unemployment and federal unemployment through the CARES Act, which was designed to augment any unemployment benefits workers may receive in your state.

The Pandemic Emergency Compensation program funded by the CARES Act will provide an additional $600 per week on top of state unemployment benefits, through July 31.

The law extends state-level unemployment by an additional 13 weeks. For example, whereas most of California’s unemployment benefits last 26 weeks, the bill extends state benefits to 39 weeks. The extended benefits will last through Dec. 31.

Health plan changes

Under the CARES Act, employer-sponsored group health plans must provide for covered workers – without cost-sharing or out-of-pocket expenses – the cost of COVID-19 testing, treatment and vaccinations when and if they become available.

SBA loans

In response to the Coronavirus (COVID-19) pandemic, small business owners are eligible to apply for an Economic Injury Disaster Loan advance of up to $10,000.

This advance will provide economic relief to businesses that are currently experiencing a temporary loss of revenue. Funds will be made available following a successful application. This loan advance will not have to be repaid.

This program is for any small business with fewer than 500 employees (including sole proprietorships, independent contractors and self-employed persons) as well as private non-profit organization affected by COVID-19.

And the law’s The Paycheck Protection Program offers 1% interest loans to businesses with fewer than 500 workers.

Borrowers who don’t lay off workers in the next eight weeks will have their loans forgiven, along with the interest.

These loans are designed to provide a direct incentive for small businesses to keep their workers on the payroll. If small businesses maintain payroll through this economic crisis, some of the borrowed money via the PPP can be forgiven – the funds will be available through June 30. Act fast.

Mid-sized employers

Under the CARES Act, the Secretary of the Treasury is authorized to implement financial assistance programs which specifically target mid-size employers with between 500 and 10,000 employees.

Loans would not have an annualized interest rate higher than 2% and principal and interest will not be due and payable for at least six months after the loan is made. But unlike loans under the PPP, these are not forgivable.

Large employers

The CARES Act provides $500 billion to the Treasury Department’s Exchange Stabilization Fund for loans and other funding for large companies and corporations affected by the outbreak.

• $454 billion is set aside for loans, loan guarantees.
• Companies that receive funds are prohibited from using them for stock buybacks.
• Loans include terms limiting employee compensation and severance pay.

Like loans for mid-sized employers, they are not forgivable.