HSA education is happening, but is it effective?
New research reinforces the growing convergence between health and retirement savings, and more than half of respondents educate employees on allocating assets between their 401k/403b plan and a Health Savings Account (HSA).
However, employee education remains the dominant concern of plan sponsors (indicated by 60% of respondents), according to the Plan Sponsor Council of America’s first-ever survey on HSA design and use.
“The growth in HSA usage and assets has been explosive, yet this is still a relatively new vehicle that is widely misunderstood,” PSCA Executive Director Jack Towarnicky said in a statement. “These results indicate that plan sponsors have an opportunity to help employees understand how HSAs can be part of a holistic retirement savings plan.”
The survey of nearly two hundred plan sponsors found that the most common resources used to educate employees about their HSAs were “how-to” guides (56.6%) and group presentations (59.9%).
HSA education takes place primarily at open enrollment for 76.4% of organizations, though one-in-five plan sponsor respondents say they offer HSA education multiple times throughout the year, according to PSCA.
“Health savings accounts can make a substantial difference in savers’ abilities to fund their expenses in retirement—especially when contributions are directed strategically,” said Ed Murphy, president and CEO of Empower Retirement, which sponsored the survey. “These survey results tell us that employers and employees are discovering the power of using HSAs as a vehicle for savings and that we must remain committed to helping them understand the best way to use these accounts to begin saving for their healthcare expenses in retirement.”
Major findings
- 2% of organizations have offered an HSA to employees for 2 to 5 years while 34.4% have offered an HSA to employees for 6 to 10 years.
- A quarter of organizations encourage or offer additional education to employees who do not contribute to the HSA or only contribute a nominal amount.
- The average participant contribution in 2018 was $2,595 and the average account balance at the end of 2018 was $5,239.
- The vast majority of responding organizations (85.6%) offer investment options for HSA contributions, though three-quarters require a minimum balance of at least $1,000 to invest assets beyond money market funds or cash.
- Fewer than 10% of organizations use or suggest a default savings rate to employees for their HSA.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
