There’s a new way for employers offering high-deductible health plans and health savings accounts to provide a valuable benefit to retiring employees.
HSA Bank, a division of Webster Bank, N.A., announced today that it has expanded access to a new solution designed to support employees into retirement: the retiree reimbursement arrangement (RRA).
With National Financial Awareness Day coming up on August 14, retirement preparedness is top of mind for many Americans and their employers. An RRA is a solution for employers looking to help their retirees offset healthcare costs in retirement even if they do not offer a group retiree health plan.
The 2021 HSA Bank Health & Wealth IndexSM, found that future financial preparedness for older Americans is a serious concern. Almost all (93%) consumers over 55 years old are worried about current or future medical bills and of those consumers, more than one third reported they rarely save money for future healthcare expenses.
This is a real problem for Americans and according to a recent study by HealthView Services, it is estimated that a healthy, average couple age 65 who retired in 2020 will spend $662,156 on retirement healthcare expenses.
That is more than twice the estimate from a Fidelity study released in May, which found a 65-year-old couple retiring this year can expect to spend $300,000 in health care and medical expenses throughout retirement.
Still, anything requiring hundreds of thousands of dollars in retirement needs to be addressed.
Compared to defined benefit retiree healthcare plans, Milwaukee-based HSA Bank says RRAs can be a more predictable and cost-effective option for employers to continue to provide for their employees into retirement. By contributing funds, employers can provide their employees with tax-free money to help them pay for Medicare premiums and other qualified medical expenses incurred during retirement. If all funds follow guidelines from the Internal Revenue Service (IRS), the contributions are also tax-deductible for the employer.
“We are thrilled to offer this retirement solution for more employers,” said Jason Kessler, SVP, Director of Product Management at HSA Bank. “RRAs are a great way for employers who offer HSAs to their active populations to continue to play a part in the well-being of their employees into retirement, and are part of a larger focus of HSA Bank to provide peace of mind and financial security for consumers throughout their lives.”
SEE ALSO:
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- Bend Financial Expands HSA Investing Platform
- IRS Releases 2022 HSA Contribution Limits
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
