The Plan Sponsor Council of America (PSCA) released its latest health savings account (HSA) benchmarking survey, finding that more employers are positioning the HSAs as a viable retirement savings strategy.
The 2023 Health Savings Account Survey, sponsored by HSA Bank, queried 529 plan sponsors who offer an HSA program to employees, found that more than a third of employers marketed the tools as a retirement savings tool in 2022, up from 27% two years ago.
A higher number of employers are also incorporating notable retirement savings tactics, including automatic enrollment and rollovers, into their administration. Nearly half of organizations (47%) have automatically enrolled employees in the HSA, up from 42% in 2021 and 35% in 2020.
Additionally, 60% of organizations currently allow rollovers from other HSAs, with another half who encourage their employees to rollover accounts. An additional 60% of employers say they pay maintenance fees for active employees, compared to a third of plan sponsors who place the responsibility on the participants to pay fees.
Whereas education on the tool has often been cited as a top concern by employers in the past, more plan sponsors are now worried about the possibility of employees funding their HSAs. Today, 59% of plan sponsors cite employee education as a top concern, relative to 70% of employers in 2021. This is compared to a growing number of plan sponsors who voice worries concerning employee funding resources (32%).
“Concern for employees being able to fund their HSAs is growing among employers as the economy continues to struggle with higher costs of living, and many are putting supports in place to help,” states Hattie Greenan, director of research and communications for PSCA, in a statement. “Employers see the benefits of HSAs to help employees cover health care expenses now and in the future and are structuring their programs to help employees do so.”
Additional findings from PSCA’s 2023 HSA Survey include:
1. Participation: Nearly 90% of eligible employees had a health savings account in 2022 with 80% making contributions to it, up from 73% in 2021.
2. Employer Contributions: Three-quarters of employers make contributions to the HSA. Most provide a set amount per coverage level.
3. Investments: Sixty percent of responding organizations offer investment options for health savings account contributions, though most participants choose not to use this option – 70% of all assets remain in cash.
“The cost of retiring continues to grow as health care becomes more expensive and it’s critical that employers incorporate HSA investment education into retirement and financial planning programs,” said Ann Brisk, senior director of innovation and strategy at HSA Bank. “This new research highlights the opportunity to educate employees about the benefits of HSAs as an investment account and change the perception of how these accounts can be used to empower consumers to think holistically about long-term financial planning, especially during open enrollment season.”
More information on the survey can be found here.
SEE ALSO:
- HSAs See High Growth, Yet Key Issues Remain
- Americans Still Largely Unaware of HSA Benefits
- HSA Assets on the Rise For Midyear 2023