PLANSPONSOR - October/November 2019 - 21

Employers
May Need to
Ask for HSAs
That Allow
Investing
ACCORDING to health savings account
(HSA) provider HealthSavings Administrators,
90% of employers, benefit
consultants, benefit brokers and financial
advisers it recently surveyed said
health savings account (HSA) participants
are either somewhat or very knowledgeable
about using the accounts as a
means to save for retirement. Yet, just
16% of the benefit professionals said they
counsel account holders to invest their
HSA funds. And over one-third (36%)
downplayed the importance of focusing
on investing vs. saving or spending, with
74% saying they simply encourage their
account holders to save.
But employers disagreed, the survey
found. When asked which HSA attributes
are most critical, 65% cited a focus
on investing, and nearly 40% said they
encourage HSA participants to invest as
a retirement option.
Craig Keohan, chief revenue officer
at HealthSavings Administrators, says
these findings stood out for him and
should be a wake-up call for brokers: Plan
sponsors have recognized the opportunity
in HSAs, but they may have to ask for
programs that allow investing.
Alison Moore, vice president of
marketing at HealthSavings, cites a July
report from HealthView Services that
says, " Total lifetime health care costs
for a healthy 65-year-old couple retiring
this year are projected to be $387,644
in today's dollars ($572,960 in future
dollars). This includes premiums for
Medicare Parts B and D, supplemental
insurance (Medigap) and dental insurance,
as well as out-of-pocket costs related
to hospitalization, doctor visits, tests,
prescriptions drugs, hearing services,
hearing aids, vision and dental. "
She also cites a statistic from the
Employee Benefit Research Institute
(EBRI), which says the industry average
for invested assets in an HSA is 4%. But
her company has found this average to be
13 times higher: 52%.
Whether or not an HSA provider
allows for investments depends on its
business model, says Keohan. " Right
now, cash, from a revenue-generating
perspective, is better than investments.
For providers, the net interest margin off
cash is higher than what it would earn off
the investment fees it would charge. "
TALKING POINT
How Retirees Spend
Average Household's Total Expenditures
Spending is lower
for households
with older retirees
compared with
households with
younger retirees.
$55,000
$50,000
$39,000
50 - 64
years
65 - 74
years
Average Household's Health Care Expenditures
Expenses don't show
large variations;
however, taking into
account that family
size reduces with age,
per-person average
health care spending
was largest for the
oldest age group.
$4,100
50 - 64
years
Source: Employee Benefit Research Institute
$4,100
65 - 74
years
75 years and
older
Keohan also notes that, traditionally,
most HSA providers would require
employees to achieve a certain balance
before they could invest their HSA assets;
however, this is changing.
The HealthSavings survey found the
majority (58%) of employers and benefit
professionals offer only one HSA option.
When asked why this finding is important,
Keohan says, " For health plan coverage,
employees are offered choices. Employers
are thinking they should offer more HSA
options because some providers look at
accounts only as spending vehicles, while
others consider them a savings vehicle.
It's an opportunity for employers to offer
both types to employees. It's important
for participants to invest HSAs to ensure
they have a secondary retirement vehicle, "
Keohan says. -Rebecca Moore
$4,000
75 years and
older
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