Sep 02, 2020
More than half of employers now position the Health Savings Account (HSA) as a retirement savings vehicle, according to a survey by the Plan Sponsor Council of America. However, employers struggle to explain HSA benefits to employees.
Jack Towarnicky, principal researcher for the American Retirement Association says that employers need continued support in explaining the unique benefits of HSAs. They can overcome some of these educational barriers by aligning HSAs with the employee’s retirement savings programs rather than as just a separate health benefit.
The survey also reveals how employers are using HSAs:
- The average participant contribution was $2,595 in 2019, the same as in 2018
- The average account balance was $5,627 at the end of 2019 -- up slightly from a year ago
- Eighty-four percent of employers offer investment options for HSA contributions, though more than 80 percent require a minimum balance of at least $1,000 to invest assets
- Nearly a third automatically enroll employees in the HSA if they enroll in the HSA-qualifying health option. But fewer than ten percent use or suggest a default savings rate
- Employers provide HSA education primarily during open enrollment, but more are educating their employees at other times throughout the year
In a related survey, even though HSAs offer generous tax benefits, only 6 percent of accountholders invest a portion of their HSA. The Employee Benefits Research Institute study reveals that educational outreach could be helpful in encouraging employees to invest. Also, giving employees seed money in their HSAs could nudge more to invest their balances sooner.
Contact your LISI Regional Sales Manager for key strategies to help your clients educate employees about their HSAs.
