Employers are paying more attention to how they can educate their workers about healthcare and health savings accounts (HSAs), finds new research from the Plan Sponsor Council of America (PSCA).
PSCA’s sixth annual HSA survey, sponsored by HSA Bank, found that employee education and engagement were the top-cited services that employers are looking for from a vendor, with more employers providing this type of education regularly.
“The ability for employees to be able to fund their health savings accounts is a concern cited by double the number of employers as two years ago,” states Hattie Greenan, director of research and communications at PSCA. “Employers are seeking more support with educating employees about the benefits of savings in an HSA to address these concerns.”
Participation and account balances also grew alongside the interest in education, finds PSCA. According to the research, 90% of eligible employees had an HSA in 2023 with three-quarters making contributions to it. The average participant contribution in 2023 was $2,609, up from $2,323 the year before. Similarly, the average account balance at the end of 2023 was $6,165, up slightly from $6,130 in 2022.
PSCA also surveyed employers on plan features, including automatic enrollment, employer contributions, and investment options. Over 40% of plan sponsor surveyed say they automatically enroll employees in a health savings account if they enroll in the HSA-qualifying health option, and three-quarters of employers make contributions to the HSA, with 57% providing a set amount per health plan coverage level.
Two-thirds of organizations offer investment options for health savings account contributions, up from 60% the year before, the research found. However, investment usage remains low as only 18% of participants invest their HSA balances, accounting for a quarter of all health savings account assets. This suggests that employees are utilizing the benefit as a short-term spending account rather than a retirement planning tool, even as more employers market the feature as a retirement benefit, the research concludes.
This puts the onus on the employer to advocate the retirement planning benefits of HSAs. According to PSCA, only a third of employers talk to employees about using their HSA as part of a retirement planning tool and less than 30% recommend participants include their HSA balances alongside their retirement accounts. While more employers have mirrored their HSA investment options with 401(k) investment benefits, less than 10% of plans do.
“Consumers don’t always realize the powerful tax advantages HSAs provide in supporting costly healthcare expenses,” added Ann Brisk, senior director of innovation and strategy at HSA Bank. “This research emphasized the need for employers and their providers to bolster efforts in educating employees about using HSAs for medical expenses now and in the future so they will fund it as much as possible.”
SEE ALSO:
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Higher Numbers of HSAs Positioned as Retirement Savings Strategy
What Younger Generations Potentially Miss With HSAs and How Employers can Help