PLANSPONSOR - April/May 2021 - 25

TOTAL BENEFITS | HSAs
Often, because employers view HSAs as the former, they fail
to focus on the right metrics, he continues. " For example, enrollment
alone is not a very meaningful metric for an HSA, if it's
primarily a retirement-savings benefit. Participation in a 401(k)
is just a small metric to measure success, " he says. " What really
measures success is metrics such as average deferrals and investment
diversification. If you look at an HSA through the lens of
it being a wealth-building vehicle, those are the kinds of metrics
you need to track. "
Black suggests three categories of metrics that plan sponsors
should focus on tracking. " The first is how many people are
participating in the HSA [program]. The second is contributions,
looking at data such as average contributions and what share of
income is being put into the HSAs, " he says. " The third is the share
of employees who are investing their HSA money, which is really a
metric for how many see their HSA as a long-term benefit. "
Employers should set goals for improving the key metrics,
Black recommends. Voya works with its employer clients to
set goals specific to each, based on factors such as employee
demographics, how much the employer subsidizes employees'
high-deductible health plan costs, and how much the employer
contributes to employees' HSAs. " There are so many variables, "
he says. " I don't know if I'd say there's a single rule of thumb on
the goals for improvement you should set. But you should absolutely
set specific goals. "
Not all employees who pick a high-deductible health plan
will immediately decide to enroll in an HSA, says Scott Riordan,
vice president of health and welfare services at Sentinel Benefits
& Financial Group, in Wakefield, Massachusetts. " If an employer
is introducing HSAs for the first time, 15% to 20% initial enrollment
is what we see typically, " he says. " The more the employer
is willing to 'seed' the HSAs with an employer contribution, the
higher the uptake will be. " HSA participation typically grows
gradually, over time, he says.
The average balance in a Fidelity HSA is currently $5,800,
Klumb says. Seventeen percent of Fidelity HSA-holders have
invested at least some of their assets-for a total of 42% of Fidelity
HSA funds-and that is with an intensive communications and
education campaign. " We have seen that number growing over
the past five years significantly, " she says.
In Sentinel's book of business, about one-third of total HSA
contributions are invested, versus being held in cash, Riordan
says. " I do think it has risen steadily: It was probably 25% a couple
of years ago. " How high the percentage goes depends on average
balances, plus the effort an employer makes to explain the concept.
" Unless you educate employees, many people don't even know it's
possible to start investing in their HSA, " he says. " A good rule of
thumb [for them] is to at least have enough in cash to cover a year's
worth of the deductible, and then consider investing the balance. "
Riordan says it is important for employers to keep an eye on
HSA utilization metrics; Sentinel regularly reports to its clients
the aggregate data for the most significant ones, such as the
average account balance and investment allocations. " Looking at
the metrics helps to shape your understanding of how people use
their HSA, " he says. " Is it being used as a transactional, dollar-in
and dollar-out account? Or are employees accumulating savings
in their account? By looking at the metrics, you'll know if [the
program is] headed in the right direction. You'll know when
employees start to think of their account more as a retirementsavings
account than as a transactional account. "
It is also important for an employer to compare utilization
of its HSA benefit with how the accounts are used at other
employers, Klumb says. " Definitely, you want to use benchmarks,
and look at those employers around you, to see how
you're doing, " she says. " We help an HSA client evaluate that
information against the aggregate analytics for all of our HSA
clients: We benchmark it against our book of business overall
and that employer's particular industry. " -Judy Ward
HSA POSITIONING BY EMPLOYERS
49%
32%
5%
0%
Exclusively
a retirement
strategy
10%
Mainly
a retirement
strategy
Equal parts
retirement savings
and health savings
Source: 2021 PLANSPONSOR Health Savings Account Survey
Mainly a shortterm
health
savings tool
Exclusively a shortterm
health
savings tool
4%
Indifferent /
Neutral in
positioning
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