In recent years, there has been a resurgence in mental health awareness, especially after the COVID-19 pandemic. Thankfully, public attitudes and mental health treatments have improved dramatically since the early 20th century, when the National Committee for Mental Hygiene (now known as Mental Health America) was established. However, some battles remain, especially regarding costs and getting treatment.
While most employer-sponsored insurance plans and plans available on the Marketplace cover mental health (it is considered an essential health benefit), high out-of-pocket costs can discourage people from seeking help.
On average, Americans spend $1,080 per year for mental health treatments, and nearly 1 in 3 Americans feel mental health treatment is out of reach for them. This is one of the reasons why 55% of people who need help receive no treatment.
Mental health affects a person’s personal life and workplace performance. Employer benefit plans can be part of the solution. By sponsoring tax-advantaged benefit accounts, companies can offer a financial remedy that supports employee mental health.
Employees have proven they will access mental health benefits when they are available. Nearly nine in 10 (86%) employees with mental health benefits use them, making it easy for employers to include these tax-advantaged accounts in their benefits package.
How Tax-Advantaged Benefits Support Employee Mental Health
Healthcare Spending Accounts
The big three in healthcare spending accounts – Flexible Spending Accounts (FSAs), Health Savings Accounts (HSAs), and Health Reimbursement Arrangements (HRAs) – provide options for reimbursing participants for mental health treatments and other associated costs. They also give employers flexibility with their annual benefits plan.
The list of eligible healthcare expenses includes treatments that an FSA, HSA, or HRA can reimburse. Some of these expenses include deductibles and copays for:
- Therapy sessions
- Psychiatric care
- Substance abuse treatments
- Prescription medication
- Alternative treatments, such as acupuncture, hypnosis, and massage therapy
These accounts could also cover mileage for travel, lodging and meal allowances, and certain fitness programs.
Employer-sponsored FSAs or HRAs allow employees to participate without enrolling in a health insurance plan; employers can offer them as a standalone benefit. HSAs require participants to simultaneously enroll in a qualified high-deductible health plan to open an account and contribute.
With an HRA, the employer can customize the plan contribution amounts and eligible expenses (following IRS guidelines) for reimbursement. In contrast, the IRS sets the contribution limits and expense eligibility for FSA and HSA.
Lifestyle Spending Accounts (LSA)
Another tax-advantaged option is a Lifestyle Spending Account (LSA). An LSA is employer-funded and enables organizations to tailor the plan for their workforce’s needs. This includes choosing eligible expenses, such as childcare, transportation, wellness and fitness programs.
With the flexibility offered by an LSA, employers can also make mental health-related expenses eligible for reimbursement. Plans can cover the cost of digital resources like telehealth services, apps, articles, and webinars. Additionally, LSAs can support other mental and emotional well-being expenses, such as yoga and meditation classes, meal delivery service fees, recreational sports fees, and even travel or entertainment tickets.
Student Loan Repayment Assistance
Mental health support is not limited to medical treatment.
More than 44 million Americans have federal student loan debt, with an average balance of $37,000. Not surprisingly, student loan debt is a significant cause of stress, anxiety, and instability.
Financial tools like a Student Loan Repayment Assistance (SLRA) benefit can alleviate that worry and help pay down those outstanding balances.
Thanks to legislation passed in 2021, employers can contribute up to $5,250 annually per employee in non-taxable student loan payment assistance through 2025.
SLRA is a valuable tool that is in high demand. Forty-five percent of workers consider student loan repayment assistance the single most important employee benefit, ranking it above additional retirement and healthcare contributions.
Benefits Literacy
Tax-advantaged benefits like FSAs, HSAs, HRAs, LSAs, and SLRAs allow employers to invest in the overall well-being of their employees, which can make people feel valued and increase productivity. However, improving benefits literacy is key to enabling employees to get the most out of their benefits.
If you currently offer or want to add these benefits, pair them with an internal education campaign. Nearly half of all employees say they do not fully understand their benefits package, meaning they may not know what resources are available to them.
People typically know that FSAs and HSAs can be used for common expenses like prescriptions and doctor visits. However, they may not realize they can also use them for mental health treatments. Plus, customizable accounts, such as HRAs and LSAs, can vary from one employer to the next; if an employee had an HRA with their previous company, your plan may have different cost structures and reimbursement options.
