Wanna know how much you’ll pay for healthcare in retirement? Who wouldn’t? One firm just made it easier to estimate.
Colorado-based Empower Retirement unveiled an integrated “health and wealth experience” for sponsors and participants to simplify and clarify savings priorities. They can then compare the costs with potential savings in a health savings account (HSA).
It’s part of an integrated technology push recently deployed by the firm to make presentations and cost-illustrations more intuitive and easier to understand.
“Employees are discovering the power of using HSAs as a vehicle for savings. These accounts have grown exponentially over the past several years and we are seeing balances building,” Empower president Ed Murphy said in a statement. “Having dollars set aside in this way provides the opportunity for many Americans to effectively manage what is likely to be one of the largest expenses in retirement.”
Features include:
- A holistic view of a participant’s retirement readiness, using a numeric estimation of the percentage of working income an individual is on track to replace in retirement and based on numerous financial factors;
- Technology that makes it easier for participants to adjust their deferral with a click and send those changes straight to the payroll department;
- HSA utilization, blending data of prior year contributions and annual estimates; and
- Payroll integration, which simplifies administration for sponsors.
It allows employees “to think about retirement in categories and visualize which part of their savings will be allocated to which expense category.”
A survey conducted by the company in 2017 showed HSA information and innovation is needed.
About half of respondents were familiar with health savings accounts, but only 30 percent could identify features correctly.
Among HSA benefits, the tax advantages of these accounts drew the least level of awareness with only 22 percent responding that they understood these features.
The survey results also showed that respondents who use an HSA are more confident than others in their ability to cover healthcare expenses in retirement by a margin of 9 percent (43 vs. 34 percent).
Murphy explained that the updated interface is designed to minimize the administrative burden on the part of employers.
The model Empower employs and the reasoning behind it is laid out in a white paper, “The New Rx for Retirement.”
“It goes beyond calculating projected healthcare costs by showing employees how much it will take to cover those costs and what the savings accounts will look like in the future if they make changes to their monthly contributions,” according to the company.