Flexible Benefits: More Show Less Tell

Hello everyone. Welcome to today's McGriff webinar, More Show, Less Tell. This meeting is being recorded and we will send out the recording and slide deck after the presentation.

This presentation has been approved for one hour of SHRM and HRCI credit, and we will include your CE certificate when we send out the recording and slides to our attendees. Please note that CE is only available for participants who watch the full one hour presentation live. CE credit is not available for those who may be watching this recording at a later date.

Also, the Q and A and chat are open, so feel free to share your questions or comments during the presentation. We may not be able to answer everything live, but we'll follow-up in a recap email later. And with that, I'll go ahead and pass it over to Holly to get us started. Holly?

Thanks so much, Kaelin. Hi, everyone. Thank you so much for joining this webinar today and for spending part of your busy day with us. My name is Holly Murrah, and I am presenting on behalf of McGriff's Flexible Benefits and COBRA administration. I'm one of our development executives on our national sales team, and I'm located in Lexington, South Carolina.

I volunteered to speak for this webinar today because I am passionate about education opportunities. I have been working in the insurance industry for over twenty years now, and it's not the insurance part that I love so much. It's really just being able to help people, and that's what keeps me in this space. Knowing that I can make a meaningful difference in people's lives is what draws me to employee benefits. And the flexible benefits that we will be talking about today really do help others, and they do have the potential to save employees thousands of dollars. I believe that if we can better understand flexible benefits ourselves, then we are going to be in a better position and more well equipped to help more people.

Today's webinar, More Show, Less Tell, is ideal for employee benefit professionals and HR teams wanting to improve their understanding of flexible benefits, the claims process, and how to enhance their enrollment strategy to really drive participation.

I am super hoping that each of you is gonna be able to walk away today with at least one moment where you have learned something new. So let's get started.

Today's agenda includes three sections. We will have what are flexible benefits, FSAs and HSAs.

Section three will be employee education. And then at the very end, we do have a bonus content section. And that's going to be so that you can see all of the stuff that's in the weeds, things we just don't have quite enough time to fit into our fifty five minutes together. So please know that if there's something that I don't cover, it's probably going to be in those notes afterwards.

So what are flexible benefits?

Flexible benefits is a type of benefit that is going to offer some kind of pretax advantage in most cases. They give employees a lot more control over their benefits. And they help eliminate that feeling of one size fits all coverage.

So before we can really get into what FSAs and HSAs are, I thought we should back up a little bit and just discuss some of the basics about flexible benefits in general.

These kind of benefits are unlike some of the traditional benefits out there where you just get one or two options to choose from. It's either this plan or that plan. With a flexible benefit, you get to choose options and then customize those to fit your unique circumstances, such as your age, your family size, your health needs, and then any personal interests. There's typically not going to be any cost to the employee to participate, and the funding can be a mixture of employee and employer contributions.

Because most of these plans are going to be offered on a pretax basis, there's also some benefit to the employer, who will enjoy some payroll tax savings for every dollar that an employee contributes.

The administration's cost.

Typically, this is going to be something you need to get a quote for, and it's going to vary depending on the size of the group and the specific benefit that may be chosen. And let's see the menus of what kind of benefits there are.

Today we're going to talk about, as I said, the FSA and the HSA because those are the most popular.

The administration cost. Oh, I apologize. I think I left the screen.

These are the different types of benefits that are considered flexible benefits.

Not sure if I showed that one. Okay. Administration costs.

As I said, they are gonna be typically something you need to get a quote for. But employers are going to be able to save seven point six five percent in their payroll taxes for every pretax dollar that is spent or contributed to the account.

Now, what you may not know is that the payroll tax savings often are more than likely going to cover the administration cost. So it's true. Money can go right back into your payroll, and you can use that to offset the cost of offering these benefits or maybe another benefit that you're offering. Either way, regardless of your size, big or small, there's something that's in there for the employer.

Now let's talk about what employees want. There has been a noticeable shift in recent years towards having more personalized benefits. You've probably noticed that. Right? And that's in a direct response to us having these multigenerational workforces. We've got generations that value just different things, right? So that one size fits all approach is kind of obsolete.

Each value, excuse me, each generation is going to value something a little bit different. So one study that I was looking at showed that eighty four percent of employees, they want to have a more personalized, comprehensive benefit package.

And that supports this aspect that people want to have a more personalized choice, and they want to have some kind of tools for financial wellness.

There's also a steady increase in the financial stress among the workers, and I don't think that anybody would disagree with that, right? I mean, have heard for years now that financial stress negatively impacts the overall health and on the job performance of our employees. There's dozens of reports that come to a shared conclusion that, fair or not, employees are looking to their employers for financial wellness tools to help them manage their personal financial stress. So not only do employees want to have these more personalized benefits, they also want you to provide solutions and tools to help them manage their financial burdens.

So like I said, fair or not, that is what the data supports.

So, hey, let's talk about how flexible benefits can provide a solution to you as employers.

Not only are they going to be able to attract and retain the quality talent, they're also going to help the employees be able to keep more of their hard earned paycheck.

This means we are taking some kind of action to reduce and mitigate that external financial stress, and we know that that's spilling over into the workplace.

And then if we can reduce that, we know our employees are gonna perform better because they will value and appreciate those benefits we offer and not be as stressed out. And when they're not as stressed out and they're thankful to have these benefits, it boosts morale, and that fosters employee loyalty. On top of that, you've got the payroll tax savings. So my friends, it's a win win.

So I realized today we might have some of you joining us who are in an HR position, and you might be self administering these plans. So I thought I'd take just a moment and explain what the role of a third party administrator, or a TPA, is.

A TPA for flexible benefits is going to provide a tremendous amount of administrative relief by handling the day to day administration of these plans that have ever changing rules and regulations. You see, our bodies over at the IRS, they make it a point to change contribution limits, change rules every single year, And sometimes they make these changes during the year.

And with all those changes, it's very, very hard to keep up. And if you have something that's not in compliance, then you become vulnerable to having a very significant tax consequence with the IRS. If you were to be audited or if any single one of the employees got audited and there were to be a problem, that could be a significant issue for your HR team to deal with. So it's just a lot for an individual HR team or even a collection of HR professionals to handle on their own. So that's why so many companies find it helpful to work with a TPA.

Now the kind of things that a TPA would handle would be things like your plan document, the nondiscrimination testing, the plan designs, the establishment and maintenance of the accounts for the participants, access to debit cards, claims adjudication, and access to an employee portal and sometimes a mobile app.

Now, because there are so many factors that are going to be subject to change with flexible benefits, it's always best to have some kind of reference to the IRS publications. Go out on their website instead of relying on something you might find on Google. The IRS website has a great search tool, and I've generally found it to be quite user friendly. So go there instead of Googling.

In our next section, we're going to dive into FSAs and HSAs.

Now before we can get into what FSAs and HSAs are going to cover, it's important that we understand the IRS definition of medical expenses.

So I've got this pulled up here so that you can see some things highlighted. But this is going to be found in IRS publication five zero two. It's also going to be in section two thirteen of the tax code.

I do have those highlights, but I'm going to read the basic definition, which is this.

Medical expenses are the costs of diagnosis, cure, mitigation, treatment, or prevention of disease and for the purpose of affecting any part or function of the body.

Did you catch all that?

Do you feel like you know what a medical expense is? Do you understand exactly what it is from hearing that?

I mean, I sure don't feel like I know exactly what it is that they consider. It basically opens up lots of questions, right?

So let's just talk about how is it that we are going to get employees to understand that, right? How do we help them understand what can and cannot be covered by an FSA or an HSA? So first, I'm going to share a story with you about how I came to learn about this myself. You see, prior to working at McGriff, I had basically paid no attention whatsoever to what flexible benefits were.

I had no idea how helpful they could be for my family.

So year after year, even though I knew a lot about employee benefits, I didn't know a lot about this. So my husband would be offered flexible benefits at work. I would be offered flexible benefits, but neither of us really knew much about them. I mean, knew that they were for, like, health expenses, but that was really it.

That's what a lot of people think, right? So we always just did the easy thing. We hit decline. Never thought about it again.

Then one day, I saw a flyer. Y'all, there was absolutely nothing remarkable about this flyer. It was just a series of lists, and it said FSA and HSA eligible and ineligible expenses at the top.

Well, in a matter of about a minute, I had this feeling of, oh my gosh. Why has no one ever shown me this kind of list before?

And then I thought, I mean, I spend money on all of this stuff. I mean, a lot of it, at least. Not all of it, but lots of things on these lists I spend money on. So, yeah, sign me up. I get it.

And what I'm trying to show you guys is that before seeing this list and really understanding what is and isn't available to be covered by an FSA or an HSA, I just said no. So I'm here to tell you most people are just unaware of how much and how many things these plans can cover. And they don't understand them, so they don't enroll.

And because I was curious to see if other people in my orbit would have a similar reaction to that flyer if they read it and truly knew, I thought, well, I guess I should, go ahead and ask around and see if if I was the only one.

Well, being the insurance nerd that I am, I actually went around with this flyer, y'all.

So here's a little vision of me, the insurance nerd, with my dream torso, and I'm all happy and nonchalantly walking around saying, hey. Can I show you this boring flyer? But no, really. Everyone I showed this flyer to, they were like, oh, of course.

I'll I'll look at it. And I'm not kidding you. Person after person that I showed or texted that flyer to expressed the same level of surprise that I did. And then subsequently, they also expressed interest in enrolling in an FSA or an HSA.

And all it really took was looking at that flyer and knowing what they could spend pretax dollars on.

And you see folks, with very few exceptions, once people do have a straightforward education about what it is it covers, then that light bulb's gonna go off, they're gonna say, oh, yeah. I spend money on this kind of stuff. So I figure, why don't we take a look at this flyer together because I want you to maybe experience what I did.

Now, like I said, nothing fancy about this, okay?

So all I did was blow up a one page It's a real flyer. It's just front and back, and it's a bunch of these little lists. And it's, you know, really small print. I've highlighted some of these subsections for easier viewing today.

But are you seeing anything on this first page? I realize it may not be any ah 's on the first page, but maybe there will be. But if you see something that was news or is news to you and you had no idea that that could be covered, I'd love to know your thoughts. Put it in the chat. Let me know. I'm going go ahead and advance to the next slide.

But I'm curious. Any of this stuff come as a surprise to you?

Some things that stood out to me when I first read this list would be things like fertility treatments, in vitro, arch supports for your shoes, I use those. Birth control, I had no idea. And then in that third column that third column here, this is where I got some surprises.

Isn't it interesting that there's all kind of medically prescribed things from beds to exercise equipment. Did you know you can even claim your mileage? Your mileage going to and from medical appointments?

Anyone have a teenager or teenagers? I've got a couple.

Did you know that acne treatments and menstrual care products are covered?

What else do you see here that you didn't know could be covered with your HSA or your FSA?

There's just all kinds of things, including all kinds of over the counter. I remember talking to a friend the other day. She had no idea that over the counter medicine could be purchased with her HSA.

And by the way, this is not an exhaustive list. So there's really a whole lot more things.

There are also some ineligible categories that I feel like I should tell you, and we do highlight that on this flyer.

But I just wanted you to have a little bit more time to finish seeing what isn't part of an FSA. Because guess what? If it's on this list, we've probably been asked. So yep, we've had people call.

What about swimming lessons? Can I cover swimming lessons? I get it. But no, can't cover that with your FSA or your HSA.

Now how do participants actually use and access the funds that they are putting into their FSA and HSA? So we're going talk about that.

They have a couple of different choices depending on what the vendor has access to for them because not everybody offers a debit card. Right?

Most of the time, they are, but sometimes they may not. So if they don't, participants might need to go online to do a banking transaction or to file a claim for reimbursement on whatever employee portal they may have.

Now, the expense does need to be for a qualifying member or a tax dependent. And that's really what matters, not who is using the card and physically swiping it at the store. So for example, I've had my mother pick up a prescription for me, and she's paid for it using my HSA debit card.

So it doesn't have to be you, the participant, who swipes that card. And we'll talk about the claims process a little bit later.

So let's go ahead and dive into FSAs just a little bit and keep moving along. I know, lady, I am excited too. Got a quick question for all of you. So a little pop quiz. Precheck knowledge. True or false?

FSAs can only be offered through an employer.

Do you know?

The answer is true.

Give yourself a high five if you knew that.

Now, there are three categories of FSAs, And your plan can have one, two, or all three of these categories offered in it. In general, when you hear somebody say FSA in the singular form, they're probably referring specifically to this health FSA.

The dependent care is usually shortened to just dependent care. And the limited purpose FSA, I sometimes hear people just say the limited purpose. Or they may say limited FSA.

We're going to talk a little bit about the basics of a health FSA first. The health FSA is a pretax account offered by employers to help employees pay for their qualified medical, dental, vision, and dependent care expenses.

The employees get to elect an amount to set aside from their paycheck pretax.

The contributions get deducted evenly across all of their paychecks throughout the year. But they will have access to the full amount that they have elected on day one.

The expenses do need to be incurred during the period of coverage, and all claims must be substantiated.

Again, we're going to talk about that a little bit later as well.

The FSA is going to include things like a plan document. It's going to have nondiscrimination testing. There'll be the election and substantiation rules. All of that is part of an FSA.

Now please note, especially around this time of year, if you're establishing a plan year and you want to do a short plan year, that's totally fine. You can do a short plan year. You could have something that starts in August, and it goes from August or September until the end of the year and then starts again in January so that it could line up if you have a traditional oneone start date for your health insurance. You might want to have your flexible benefits be the same start time.

So we do offer short plan years, and most vendors do as well.

Now, the funds in these accounts, if it is going to be a short plan year, it would be set up with contribution limits on a prorated basis. And the TPA would handle all of that, let you know what those prorated amounts are.

The funds in this account are going to be subject to the famous use it or lose it rule, and that would be after any grace period or carryover allowance.

More details on those types of things are going to be at the end in the bonus material.

So when can a change be made to an FSA election?

My friends, it's got to be during open enrollment or with a qualifying life event. And the IRS is the one who sets these requirements to make the changes. It's not the TPA. So it's not us that's being, you know, a stinker about it.

Who can apply or enroll in this? For eligibility, the big thing is they can't be covered by another health care plan that would disqualify them. And that's primarily going to be something like an HSA enrollment.

Dependent care is up next, and we're going to cover some of the basics there. I will say that while preparing for this webinar, a hot topic that was in the news was the soaring cost of dependent care in America. I'm talking for kids and for elders, right?

Everyone knows that families all across America are struggling with the financial burden of the cost of care for their loved ones.

And the newly passed bill, the big beautiful bill, does have a section that is devoted to increasing the maximum contribution limit so that families can set aside more than we've been able to in the last few years. So it's going to go from a five thousand dollars limit for your household up to seven thousand five hundred dollars starting in twenty twenty six. So not a huge, huge amount, but every little bit, right? It's all going to help.

So the basics of dependent care. Like these others, this is an account that's going to allow the employees to set aside a pretax amount of money from their paycheck, and that's going to be to cover care for a tax dependent. The eligible expenses, I've got those listed here. It's not a fully, fully comprehensive list, but it's not limited to. They care for children who are birth through age twelve from an eligible child care center, a babysitter, a nanny, summer day camps, before and after school care, also dependent care, if that's to help with a disabled dependent, and that could be a spouse or even, you know, live in parents, and elder care expenses. Now, this is not money for you to hire a babysitter and have a date night or to pay for care while you go run errands. This is an account that is specifically for care that is provided, and this is the big thing to know, this right here, to allow.

So to allow one to be gainfully employed at work, to allow one to look for work, or to allow one to attend school on a full time basis.

Those are the three things that you can spend your dependent care FSA dollars, is when you have care to allow one of those three things.

Now, the funds are only available as an employee contributes from their paycheck. So it's different from the health FSA, which is allowing them to have that full amount up front.

This plan is just as they have contributed. Now, at the end of the plan year, the same use it or lose it rules do apply after any grace period that you may choose to offer.

Qualifying individual. Excuse me. A qualifying individual is a tax dependent who has not reached the age of thirteen or is physically or mentally incapable of caring for themselves.

That can include the live in parents or a spouse.

And again, these are rules that are set by the IRS, not by a TPA.

And the key thing here is the qualifying tax dependent and then to allow you to get care for them while you look for work, work, or attend school on a full time basis.

So when can you make changes to this? Because it's important to know, right? And there are some differences. So you've got open enrollment as usual.

You've got the usual qualifying life events. But you've also got some other circumstances that the IRS says, hey, if one of these pops up, you can change your dependent care FSA election. So that can be during a change in the day care provider. The child may turn thirteen.

There can be an increase or a decrease in the cost of the qualifying care expense. I know that it says day care, but it could be care expense for the tax dependent. And then in circumstances where there's a judgment or some kind of legal order requiring a change in coverage.

The third type of FSA is the limited purpose FSA. And these are plans that are designed to work alongside an HSA. And when paired with a HSA, the limited purpose FSA is going to allow the employee to set aside pretax dollars to pay for specifically dental and vision expenses during that plan year.

So it's going to be ideal for those who want to pay for a current dental and vision expense with pretax dollars without depleting their HSA funds.

Now ladies and gentlemen, I am going to go ahead and admit I did not understand this for quite a while. Like, why would I also have a limited purpose FSA if I've got an HSA? It just really wasn't making sense to me. And I suspect there may be some of you out there who also have that question. Like, why would I have both? And here's the moment. Hopefully, at least one of you will get this.

So when you've got a limited purpose FSA, you're spending the same pretax dollars, right, but you're not spending your HSA dollars. So this is preserving the HSA fund so that those funds can be left alone, and then they can grow tax free in the HSA account.

Light bulb made sense to me. I was like, oh, I get it. Because I didn't understand why I would bother having a separate one. I had an HSA plan. It didn't make sense. But if I don't have to touch those HSA dollars, they can grow tax free. So that was a wonderful thing for me to finally understand.

So ideally, it's for anyone who wants to take advantage of that HSA for the investment part, where it can grow and be tax free while it grows.

Now, you can think about a limited purpose FSA as a lot of people say, oh, it's kind like having a thirty percent discount for your dental and vision expenses. So that's one way to frame it.

So what does it cover? Like I said, it's dental and vision.

But specifically, we've got your dental and your orthodontia visits, implants, veneers, dentures, if they're medically necessary bridges.

Then on the vision side, things like your visits to your optometrist, your ophthalmologist, your eyeglasses, your contacts, your prescription sunglasses, and then the cost of your solutions and your cases and your drops, right? On and on and on.

Now it's very, very similar to the health FSA because the participant gets to have those funds available to spend right away.

It does still have the use it or lose it rule applied after any applicable grace period or rollover.

And then it's important to know that anyone enrolled in the HSA, those are the people who can enroll in the limited purpose FSA.

Next, we're going to go to the HSA.

And these are super, super popular these days. We've got more than thirty seven million active accounts in America.

And although the bells and the whistles about what these accounts look like, those are gonna vary from vendor to vendor. It's that triple tax advantage. Right? That's what makes them shine.

So like an FSA, HSAs provide employees with greater control over their health care spending, and they're going to cover the same things, but they're only available to people who are enrolled in a high deductible health care plan.

Now starting in twenty twenty six, the people who can enroll can also be enrolled in a Marketplace Bronze plan, or they can be enrolled in the Direct primary care, also known as DPC care, a DPC arrangement. So those folks are also going to gain eligibility with the passing of the big, beautiful tax bill.

Now, HSAs are going to allow you to have money that you set aside for qualified health expenses today, but also in the future while saving for your retirement and while saving that money up to invest it.

And I'm sure you've probably heard that phrase triple tax advantage before today, right? Well, let's talk about what that means. It's basically referring to each stage. The triple tax is the three stages. So advantage number one is that when the employees contribute to their HSA, they're reducing their taxable income, and they're paying less in taxes when filing day comes around. Advantage number two, any earnings in that HSA, whether it's from interest or investments, those are not taxed as long as the money remains in the account.

And then advantage number three, the withdrawals are not taxed as long as that money is being used to pay for eligible expenses. Now, are some circumstances to do with, well, what if you withdraw it for things that aren't for medical reasons? Like, you really need this money. What are the consequences? I've got some information on that at the very end of the presentation, okay?

Another thing for you to know about HSA accounts is that these are individually owned accounts.

So even if they're set up through an employer, the account belongs to the employee. The account's fully portable. So in that way, it's quite similar to some of the supplemental benefits that you may be a little bit more familiar with, things that are part of the Section one hundred twenty five cafeteria plan.

Now a fantastic feature is that these expenses with the HSA don't have to be substantiated.

That said, the IRS still requires you to save your receipts and keep all your documentation to support your expenses should they ever choose to audit you.

And there's no use it or lose it. So unless, well, regardless of you using your funds or not, those funds are going to carry over year to year. So there is no, well, what about if I didn't spend all my money? It's going to just roll over automatically to that next year.

Now one thing to note, let's see is that excuse me. I think this is on another slide. One thing to note about the HSA is these eligibility rules. I want to make sure we cover this.

You do have to be enrolled in an HSA eligible health plan. So again, that's going to be your high deductible health care plan, but then again, in twenty twenty six, we're going to also allow for people who are enrolled in the Bronze plan or the Direct Primary Care Plan arrangement. Those are also going to gain eligibility. But you cannot be involved or enrolled in, rather, an FSA or Medicare.

And you cannot be someone else's tax dependent.

A lot of questions that we get are pretty similar, and this is one that comes up a good bit. It'll be, hey, well, if there's a married couple and they've got a, you know, a family high deductible health care plan, can they just open a joint account, a joint HSA account?

Anybody know the answer?

The answer is no. Because the HSA has to be in one person's name, just one individual's name. So what do you do instead? Well, a married individual has two options, basically.

One is one person can open an HSA in their name and then contribute up to the family maximum. Or if both individuals open their own individual HSA, like at their own companies, then they can both make a pretax contribution into their individual accounts.

But then they've just got to be real sure that they're not spending or putting more in collectively than the IRS limit allows. And regardless of which, they also have to think about what type of employer contribution, if any, is there to factor in because you don't want that to put you over the maximum limit either.

Another common set of questions we get, can I change my contribution level during the year? Or, hey, can I stop? I don't wanna do this anymore. Or, can I start putting in more?

That was one of the questions I had after I met with my financial adviser. I need to put in more than I've been putting in, more than I initially thought at the beginning of the year. Right? So the answer to both of these questions is yes because employees have awesome flexibility in how they manage the flow of the contributions to their health savings account.

My favorite part, the employee education section.

First thing I want you to think about is just evaluate your approach. What is it that you're doing to educate employees?

Because I'll tell you, a few small changes, that can really be the the big difference. It can make the difference in helping those employees to learn. So let's just look at how we educate our employees and see what little things we can tweak to make a difference this year.

First of all, I bet the majority of people on this call are not graphic designers, and they're not people who want to create fancy flyers. Right?

What I want you to do is take advantage of all of the ready made enrollment materials and the content that is available through vendor partners. There's a lot out there, so you don't need to reinvent the wheel, and you don't need to spend your time on it. So do take advantage of that. Also, around this time of year, we start seeing enrollment tool kits, and these are available all over the place. So do look at those, and don't try to do this all by yourself. There's a lot of information out there.

Now I do need to cover claim substantiation because this is something that a lot of employees are going to come to us and ask questions about, right? And if we can understand it more, then we can in turn help more people and not have as much of a frustration on our hands, right?

Claim substantiation simply means that you're gathering documentation that is needed to confirm a purchase for an eligible expense. And the IRS wants a couple of things from us. They want to know, hey, who is this for? What provider did you see?

What was the date of service? Tell us what it was for and give us an amount. Very straightforward, right? But when a claim is submitted without these details, that's when a TPA is going to have to reach back out to the participant and just simply get more information. So it's not always that they're saying, no, you can't submit, you know, no, this isn't a valid claim. It's just, you didn't submit enough information, right? So it's just those little things that we need.

Now, to operate in compliance with the IRS, substantiation is required for all, under underlying all healthcare FSA expenses, purchases. Everything you spend an FSA dollar on, there needs to be some substantiation.

And that's ultimately to protect you, and it's ultimately to protect the employee. So it's for your own benefit should either of you be audited.

And then if there are individuals who misuse any of the funds, either accidentally or intentionally, and they use those for ineligible expenses, they are responsible for reimbursing that tax advantaged account.

Now, good news.

These days, there's auto substantiation, meaning that many, many, many expenses are automatically going to be recognized as being eligible.

There's this thing called IIAS, and that stands for Inventory Information Approval System. And it's a national inventory system, and it's used by retailers, particularly those who sell healthcare services and healthcare related products.

And it's a system that verifies that purchases made with an FSA or HSA debit card are eligible medical expenses.

So many expenses like a copay at the doctor's office. And then if you're shopping at a national vendor, a big box store, they're going to have this inventory system, the IIAS, is going to be in their computer system, and that's going to allow so many products just to be swiped, and it's going to go through and be fine.

And the participant's not going to have to submit documentation if it goes through. Now regardless of the auto substantiation, the IRS still wants you to keep that receipt. Right? So you've got to keep it.

But having a dedicated shoebox, something at home that you toss that receipt into, that's what you want to make sure that you're clearly communicating to your employees is, hey. Even if it goes through and it's automatically accepted by your debit card, keep that receipt because you might be called upon to have that later. So tell your employees clearly communicate that to keep all of those receipts even when it's something that the debit card has paid for. And by the way, yes, the HSA receipts, those should also be saved.

IRS wants us to keep those as well.

Well, what about a debit card swipe that doesn't go through? Ugh, nightmare, right? Unfortunately, not all businesses are going to participate in the IIAS system, So it does somewhat depend on where you shop. So you know how when you get a receipt, sometimes it'll say FSA and HSA eligible, like right there on the receipt?

Yeah, that's one of the merchants using the IIAS. So that's a cool way to know.

When a debit card is swiped at the point of sale, it's generally going to eliminate that need for the manual substantiation. So that's really what we want, right? But if you need to submit a manual claim, it doesn't go through, then all you have to do is follow your vendor's process for filing for a reimbursement from your account. And typically, that will involve going on to the employee portal and submitting the documentation about the expense, so submitting that receipt so that you can see what it was for.

Keep in mind, there are going to be some places, particularly like dental offices, chiropractors, where they have services that are not necessarily for your health. It's maybe like a personal cosmetic procedure. That's the word I'm looking for. A cosmetic whitening or something.

Something not medically necessary. So sometimes if a participant swipes their debit card there, the system doesn't know what to do. So it doesn't automatically substantiate because it knows that sometimes people swipe cards at a dentist office or at a chiropractor, and it's not necessarily for something that is a qualifying expense. So just wanted to point out those two types of services where we sometimes see some declined debit card swipes.

I've got a couple of tips for you.

The first one is always provide the qualifying expense list. In my opinion, this is probably the single most effective way to introduce and educate your employees right up front about the health FSA and HSA.

They don't need a whole bunch of roles up front.

They need to really just know what it is they can spend their money on, right? What is it they can use their pretax dollars on?

Number two, simplify your explanation about plans, the contributions, the substantiation process. So when the time comes to review your open enrollment packet, seek some feedback from someone who isn't in this business. Ask a friend to sit down with a highlighter and circle away. Circle anything that isn't clear to them. And then you've to treat that person to lunch and say, thank you for helping me with such a boring favor.

Also, utilize bullet points, lots of bullet points. Keep it simple. Don't use any jargon. You just want to make sure people are understanding in as little words as possible. So one thing I would love to see us get rid of is the use of the phrase, instead of saying coming out of your paycheck, I would love to see pretax money as set aside.

That way there's no thought in the participant's mind that they're buying something or spending money on something. What we want them to know is that they're setting aside money or flagging money, setting it aside from their paycheck instead of having it come out of their paycheck, if that makes sense. This is stuff they want to spend their money on anyway. So the important thing is that they understand this is money they're already going to be spending. They just get to do it on a pretax basis now.

Now I've seen a lot of ways to educate employees, and there's a lot of options out there on the internet, but the simplest thing that I have seen is probably this. It's the concept of a pie.

And all you do is say this.

Imagine your paycheck is like a pie.

A pretax contribution to an FSA or an HSA means that a slice of that pie is cut and then set aside before taxes are calculated.

And then instead of paying taxes on the whole pie, you only have to pay taxes on the part that remains after you have removed that pretax slice.

It makes sense to a lot of people this way because most people don't go around thinking in their everyday life, oh, I'm going to think about pretax deductions. It just goes right over their head. They fail to make that connection of the dots about how this is helping them save money. But this concept is something super simple, and it, again, it's my favorite way to communicate to an employee what this would be like.

Tip number three. Since we're focused on FSAs and HSAs in this webinar, I do want to share just tips that are specific to those services as well.

For the FSA, we want to provide guidance and tools for them to set a SMART contribution.

The last thing you want is an employee to have a random number that they just pull out of thin air and put on that paper, right? So we need to make it very clear to them that they need to set a SMART contribution, and that's really the key to being satisfied with their HSA or their FSA. So remember, you've already given them a list of what qualifies and what doesn't qualify, so that's going to help you some.

But what we want to do is take it a little bit further, take it one step further by giving them some kind of tool to do some kind of calculating to make a SMART contribution amount. So what you're going to do is ask them to consider how much out of pocket expense do they think they had last year for their health care expenses. And then they need to consider the anticipated expenses for the next year.

Things like if they know they're having an upcoming surgery. Or maybe they know that, oh, yeah, my child's getting braces next year. Or maybe they know that they're getting ready to be out of contact lenses. So they may go ahead and calculate that amount. What we want them to do is come up with an amount they feel comfortable with and then think about is there anything extra that I can afford to put aside that I know I'm going to be spending money on anyway? Like, I know I'm going to have pharmacy expenses. So you just want them to think this through so that they're not putting down any old number.

Now, a lot of stuff online for you here. I highly recommend the online calculators and the tools and the worksheets that you'll find online.

But as many of you know, those tools are great. They help a lot. They're great. I get it.

But I've done a lot of employee enrollments, and I've sat down with people, and I've asked them, oh, did you go online and do your SMART contribution calculator? A lot of people just don't do this. Right? It's just not something anybody wants to go home and do after work.

Right? What they will do, though, is if you have a printed worksheet, that's what they're probably gonna sit down and fill out. They may fill it out at their desk.

They may take it home and do it. But they'll fill that out. They're not as likely to go online and do it. And I know that that can vary between generations, but I just want you to have an idea that there should be some kind of alternative to just saying, hey, go online. This tool will help you figure out a great amount to put down.

What we don't want them doing is coming to us upset, right? Upset about losing these FSA funds. So if we set the amount that's a reasonable, well educated, well thought through amount to put down, then we aren't going to be losing those funds, and they're not going to be complaining. Right? That's the goal.

One other thing to mention is the clear communication about that number. So I put this slide in here because I want you to make sure that you say something like this.

Hey. Everyone please know your contribution amount should be unique to your individual needs, so please don't copy anybody else's. Their needs are not the same as your needs. We've got some great tools, some stuff online. We've got these worksheets. Just make sure you're putting down a contribution limit or amount that is right for you and your family. So do be sure that you're saying something like this, communicating this to your employees.

Misunderstanding dependent care, oh my goodness. It is so much more commonly misunderstood. I just had no idea that people really did think that it was just daycare. So I think we'll see a higher percentage of participants if we have a better understanding about what it is that it covers, and then we can maybe do a little bit of things differently, just tweak it. And that'll be my tip number four is what can we do differently to help employees understand dependent care and really all that it covers?

So I think we can ask better questions, really.

If we can identify the need, that's where we're going to pick up some folks who may not understand what it really is. So we can start by asking things like, hey, do you have tax dependents incapable of self care? So you're not saying, do you have children? Do you have tax dependents incapable of self care?

And then list out some stuff aside from the daycare and the preschool. Include things like before and after school.

Include the wording summer camp because guess what? There's no before and after school during the summer, right? So include that wording.

Include some information about in home dependent care, you know, elder care for a spouse or other dependent. We want to help these folks identify that maybe they do have a need for this.

So I really got to thinking about what can we do?

What can we show our employees to help them have a better connection about understanding this? Because there's just so many people I feel like who we don't reach. So my tip number five is to provide a relatable story and then some kind of impactful visual to really show your employees how the plan works. So I'm going to share, you can see here in blue, I'm going to share, just a little blurb about my employee named Ava. She spends fifteen hundred dollars a month on day care. And I'm going to show my employees what it is excuse me what it is that Ava is able to save if she were to contribute to her dependent care. And I'll leave this on the screen and let you look at that for a moment.

But what I want you to see is that this chart quickly shows how Ava could save if she just sets aside that max contribution limit over the course of the year.

And most employees, they're going to visibly respond in surprise if they see that the difference in this lady's take home pay is actually one hundred and twenty five dollars a month more in her paycheck if she's setting aside money because she's not being taxed.

At fifty thousand, she's being taxed at forty five thousand because she's made a pretax deduction of five thousand.

So this is where they'll see, the little lights will go off, right? We want to show them some kind of visual. So what would this look like in a, like an actual enrollment situation? So I came up with a flyer. And this is maybe, you know, I know you get like one page if you're presenting your employees a bunch of information and you just don't have a lot of room. But I do encourage you to use a whole page and talk about dependent care by throwing out some of those questions that help them identify the need. Then give them a little tiny example.

And then put some kind of chart that breaks it down and shows them that they can save x amount of dollars. And, you know, customize it to the tax bracket in your area. But just do something like this.

And then instead of putting all these rules out here, put a little thing like this, learn more.

Allow them to see that if they want to learn more about this, they can click here and go somewhere else to read it or, you know, pick up the full packet of information.

We just want right now to identify and then get these folks to realize that this might be something beneficial to their family.

Whoops.

I decided I'd also give you another visual for showing employees how they could save if they were enrolled in an HSA. And I suggest you just make a chart that speaks as directly as possible to your employee base.

And tip number six.

We want to help our employees avoid unspent funds. Right? I mean, I love leftovers just as much as the next person, but not with an FSA. No. Thank you.

So if we can set some proper expectations, avoid some confusion, avoid complaints by reviewing the plan literature, making sure it's clearly communicating these use it or lose it roles, then that is going to help everybody understand the consequences of not spending it as well. Now throughout the year, there are some things you can do to clearly communicate these details to your employees. So send an email that says something about when it's near the end of school. Make sure they know, hey, are you enrolling your kids in a summer program?

Throw some things out there throughout the year to remind people to use these accounts, especially if it's new and just something they don't necessarily think of. So the occasional reminder is a great way to help people remember to use these valuable accounts.

And I can all but guarantee you that there are definitely parents who pay for summer day camp, and they've got a dependent care, but they don't think about using their dependent care account to pay for that. So just one tip there especially.

Another great time saving tip is to allow a mobile demo app for excuse me, a demo your mobile app for your participants during your open enrollment.

A vendor led demo is going to save you a lot of time, and it's going to showcase the technology that you offer. And it's really going to make it to where it's more likely for your employees to enroll. So do say yes to vendors doing some kind of education for your employees, and then you don't have to wear that hat of being the expert.

Show and tell can go beyond today, right?

I want you to know that one of the greatest things you can do is show your employees these charts. Show them the demos. Show them, show them, show them instead of just telling them. So make as much of a deal of showing people as possible instead of just standing up and saying, an FSA lets you set aside pretax dollars out of your paycheck.

It's coming out in equal installments over the course of a year. It's just wah wah wah in people's ears, right? So we want to show them, give them examples so that they can see, hey, this is what it would be like to file a claim. You know?

Look how easy this is. Click through. Show them in a demo how easy it is to work with.

Maybe they wanna know, well, how am I gonna remember what is eligible and what's not eligible? It's not like they're gonna walk around with a flyer. Right? I mean, nobody's gonna do that except weird little insurance nerd. Right? So if you don't know what's eligible, guess what? Our mobile app, a lot of the mobile apps out there have a technology that's going to have a scanner on it where people can scan a barcode and know right away if it's an eligible expense so they can scan and shop.

The thing to know about working with any vendor is they're basically going to have the same options, getting reimbursed or paying a provider. So that's going to be the same no matter where you are.

I want to remind you again, don't forget we've got some bonus material at the end of today's slide deck.

And I know it feels like we had to go at a really, really brisk pace, and I hate that for us. But I just want you to know we have a lot of resources, and we work with any and everybody. So if you have questions after today's presentation, I encourage you to reach out. Be happy to talk with you.

I do want to say that we greatly appreciate your time. I do hope you've learned something new and that you will take some kind of new nugget of information away with you that'll help you help more people.

And if you have entered a question into the chat, I just want you to know we will be back in touch with you to provide a reply.

And also, on behalf of our TPA team, we want you to know that we'd be very, very happy to speak with you, answer questions, provide a quote. We've been doing business for forty years, and we work with all brokers and companies of every size and shape and in every single state. So if we can be of service, we would love to help you, so reach out. Thanks again, everyone, for your time. Hope you have a wonderful rest of your day.