Why Aren’t Health Savings Accounts More Popular?

hsa, health savings accounts, 401k, retirement, Empower

Education is needed.

Higher contribution limits, greater awareness of health expenses in retirement—there are any number of reasons why health savings accounts (HSA) aren’t more popular with retirement plan participants and the general investing public.

Yet a new study finds a lack of consumer education is a leading culprit, and a healthy dose is needed to boost health and retirement saving.

The study from Empower Retirement and Optum Bank found that:

“And while employees can use an HSA to pay for current out-of-pocket qualified medical expenses, a longer-term strategy of building up the balance in the HSA for healthcare expenses in retirement is one of the most powerful steps employees can take for retirement planning,” the authors note, before starkly adding, “Unfortunately, many are missing out on this opportunity.”

The resulting white paper points to three main findings:

Employees want advice about how to plan for the future

While many consumers have some experience with investing, they are open to learning more about it.

Employees don’t understand the retirement benefits of an HSA

Employees likely have more than one account to plan and pay for retirement—primarily a 401k and a savings account. And while 47% currently have or have had an HSA in the past, they do not identify the HSA as a way to save for retirement.

Employers can play a key role when it comes to the HSA education

Many consumers are unaware of how much they will need to save for healthcare during retirement, and different age groups have different preferences for how they want to learn.

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