Welcome to our newest Advantage Administrators team member, Lisa Smith! Lisa is a Lead Administrator in our benefit services department.
Things to Think About When You’re Looking for an HSA Administrator
The only constant in life is change. And change can be difficult, particularly when it comes to healthcare. It’s easy to stick with what you know—familiarity matters—and a majority of employees do just that, but sometimes, what’s familiar isn’t always what’s best.
It’s not only employees who tend to stick with what they know, though—employers sometimes do as well. Change can be scary, especially if you’ve been with your current HSA administrator for a long time, but it doesn’t have to be. If you’re in the market for a new HSA administrator, here are some things you may want to consider.
Is your Health Savings Account (HSA) insured by the FDIC?
HSA administrators are typically banks, credit unions, brokerages, insurance companies, or third-party administrators, so it makes sense to find out if the products your administrator offers are insured by the Federal Deposit Insurance Corporation (FDIC). The FDIC protects people against the loss of their insured deposits in the rare event that their FDIC-insured bank or savings association fails, and insured deposits are covered up to at least $250,000. But if the bank holding your HSA funds isn’t insured by the FDIC, you could be in big trouble if they fail.
It’s also important to remember that the FDIC only covers deposit products, such as checking and savings accounts, negotiable order of withdrawal (NOW) accounts, money market deposit accounts, CDs, and official items issued by the bank such as cashier’s checks and money orders. Stock and bond investments, mutual funds, life insurance policies, annuities, safe deposit boxes or their contents, and municipal securities are not covered by the FDIC, even if they were purchased from an FDIC-insured bank; neither are U.S. Treasury bills, bonds, or notes, although those products are backed by the full faith and credit of the U.S. government.
Are participants going to be nickeled and dimed?
It’s up to you to select an HSA administrator with low fees, and your employees are counting on you to do so. Even though account fees for HSAs tend to be fairly small—typically less than $5 per month—those fees can add up in a hurry, and regularly paying account fees can eat into your savings. But many administrators have no monthly fees; it’s also common for fees to be waived once participants reach a certain minimum balance, so long as that minimum balance is maintained.
Your employees also want to be protected from hidden fees, which can include (but are not limited to) fees for account maintenance, investing, and minimum balance thresholds. Fees can also be charged for replacement debit cards, ordering checks, and having insufficient funds in an account to cover withdrawals. And it’s become increasingly more common in the past two decades to charge fees for printing and mailing paper statements. Fees, whether hidden or otherwise, can really take a bite out of your savings, but they don’t have to. Signing up for e-statements, using your debit card instead of checks, and transferring money online can save you money in the long run. And keeping enough money in your account to cover your expenses will save you from paying costly overdraft fees.
What sort of technology solutions are available?
According to a report from the Employee Benefit Research Institute (EBRI) and Greenwald & Associates, employees with High Deductible Health Plans and Health Savings Accounts are more cost-conscious than employees with traditional healthcare plans. Not only are they more likely to create a budget for medical expenses, but they are also more likely to research healthcare providers and services in order to find the least expensive treatment option. Pairing their HSAs with other options, like commuter benefits or eligible Flexible Spending Accounts, can save them even more, since contributions to HSAs and FSAs are handled on a pre-tax basis. Technology solutions—such as debit cards, mobile apps, and online accounts—can simplify the entire process for employees, from tracking spending to filing claims. And having easy access to their accounts, whether at home or on the go, can help your employees save money on eligible expenses.
But your employees shouldn’t be the only ones benefiting from user-friendly tech solutions—you should, too. Having an administrator who offers a single online account to access benefit management, reporting, and customer support interactions can simplify your life, saving you both time and money.
Are HSA investment options customizable?
Did you know that a healthy 65-year-old couple retiring this year can expect to spend around $400,000 on healthcare costs alone? Having an HSA can help mitigate those expenses and investing the funds in your HSA can potentially help them grow even faster. Health Savings Accounts offer a triple tax advantage: contributions are tax-free, earnings are tax-free, and withdrawals for qualified medical expenses are also tax-free. All the funds in your HSA can be rolled over from year to year because HSAs aren’t subject to the IRS use-it-or-lose-it rule. And once the account holder turns 65, the 20% penalty for non-eligible expense withdrawals disappears, which means that their HSA then functions a lot like a regular retirement fund.
Since most HSA participants also contribute to a 401(k) or other retirement account, coordinating your HSA fund choices with your retirement account options and offering an HSA with a brokerage account will help your employees develop a savings and investment plan that addresses all of their retirement needs.
Is it easy to switch to Advantage Administrators from another HSA administrator?
The decision to change administrators is not one to make lightly. And though such changes usually occur at the end of a plan year, they also occasionally happen mid-year. Regardless of when you decide to change administrators, though, it’s important to choose an administrator with the experience necessary to make the switch a smooth one.
Switching to Advantage Administrators is easier than you think. We’ll handle everything, so you don’t have to do a thing. Your participants can enroll online for a seamless transition, and we’ll be here for you during the transition period and beyond. We’re the local experts in plan administration—our staff averages over 15 years of experience in employee benefits. We offer comprehensive plans, complete with a mobile app, a debit card, and online account access, so your participants can access their accounts anywhere, any time. And having a single point of contact for all your participants’ benefits questions and concerns makes your job easier. Contact Advantage Administrators to learn more and make the switch today.