PLANSPONSOR - June/July 2018 - 2

Insights
On Our Watch List
A
few years ago, I needed a surgery to address a medical
issue that had been on my " watch list, " so to speak.
Routine labs showed a change in a condition that
warranted attention, and surgery was the recommended course
of treatment.
It happened to be the same year I'd given birth to my third
child and therefore had already maxed out my annual health
insurance deductible. The new labs came in just a few weeks
before the end of our plan year, and I
found myself making appointments and
scheduling the procedure immediately,
to get that and various affiliated appointments
and expenses completed within
the time frame.
The night before the surgery, I found
myself questioning whether I had made
the right choice-though I knew this
treatment was the recommended option.
I hadn't given myself much time to think
about it because of the looming cost of an
additional couple thousand dollars. While
the medical decision was the right one at
the time, my timing decision was strictly
based on our medical insurance year and
the financial considerations.
I was reflecting on this decisionwithdrawn
tax-free for qualified medical expenses-is unlike
any other savings account.
The capability to turn them into income, even for nonmedHSAs
are not just
an HR offering
or just part of a
they're so much
more. They truly
are part of an
making-or perhaps lack thereof-in a
discussion the other day with a friend who
was shopping for an orthodontist for her
daughters. She realized that by picking one a few neighborhoods
away, she would save over $1,000 on the first part of the treatment
course, and multiple thousand over the next few years. The
savings was well worth the extra travel time, she believed.
Medical decisions are rarely, if ever, made in a vacuum, and
overall financial
picture.
ical expenses, after one turns 65 makes them of significant value
for retirement income planning. Consider this: If the estimated
amount needed by an average couple to cover medical costs during
retirement is $265,000, according to data last year from the
Employee Benefits Research Institute (EBRI), a couple could pay
that using a tax-free $265,000 withdrawal
from their HSA (assuming all expenses are
qualified medical expenses) or a $344,500
gross withdrawal from their 401(k) plan
(assuming a 30% overall tax rate).
If that same couple has expenses
health insurance
conversation-
that are not qualified medical expenses, it
would take the same amount out of either
account. You can see why, at our recent
PLANSPONSOR National Conference
(PSNC), some plan sponsors spoke to me,
wondering whether participants should
move their savings to an HSA over their
401(k) after maxing out the employer
match.
That conversation, to me, underlines
one of the largest challenges I see with
these plans-how to explain all of this to
participants. As employees have several
workplace options for saving-traditional
401(k)s, Roth 401(k)s, HSAs, etc.-the
discussion of how to best allocate their money is imperative,
but also complex.
With all of that in mind, and with an eye toward the role
they loom large when one thinks about retirement planning and
saving. After all, health and wealth are clearly connected, and,
over the years, with the rising cost of insurance, company health
programs have required major discussions between the finance
and human resources (HR) groups. It's partly why, over the past
decade and a half, health savings accounts (HSAs) have taken the
country by storm. Their growth-in number, assets and usage-
has been incredible, and rightly so.
After all, HSAs are not just an HR offering or just part of
a health insurance conversation-they're so much more. They
truly are part of an overall financial picture. The tax treatment-
no taxes when that income is deferred, growing tax-free, and
2 PLANSPONSOR.com June-July 2018
these accounts can play in the retirement plan conversation, this
year, at PLANSPONSOR, we have increased our coverage of the
topic, as well as introduced events focused on HSAs. This year,
ahead of PSNC, we offered attendees the opportunity to join a
half-day event called " HSA Essentials, " and the attendance was
impressive-as were the questions (you can bet we already have
planned to address a number of these in upcoming online articles).
In October, in New York City, we'll host a day-long event
solely about the accounts, and we already have great interest and
are working with speakers who are experts in the field, to ensure
the content is most helpful. I'd love to hear from you about the
role HSAs play at your company and how we can ensure we
address what you want to know, here at PLANSPONSOR. Please
reach out. -Alison Cooke Mintzer, Editor-in-Chief
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PLANSPONSOR - June/July 2018

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