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Retirement Planning > Saving for Retirement

HSA Use Up, but Employee Education Remains a Concern: Study

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A new survey of nearly 200 employers with active health savings accounts show these plans are popular, but educating the workforce on HSA plan use is still a big concern.

The Plan Sponsor Council of America’s inaugural survey on HSA design and use found that, when given the chance, more than half of eligible employees enrolled in an HSA-qualifying health plan. The overwhelming majority of these employees opened an account and contributed to it, the PSCA stated in the benchmarking survey, released Tuesday.

The employers’ No. 1 issue, however, is employee education, with 61.4% of survey respondents identifying it as their primary concern. Difficulty of administration, the next highest category of concern, garnered only 15.7%, in comparison. The highest “secondary concern” listed with HSA offerings was compliance, with 30% of respondents zeroing in on it for this category.

“The growth in HSA usage and assets has been explosive, yet this is still a relatively new vehicle that is widely misunderstood,” stated PSCA Executive Director Jack Towarnicky in a release. “These results indicate that plan sponsors have an opportunity to help employees understand how HSAs can be part of a holistic retirement savings plan.”

The results also point to what PSCA calls a “growing convergence of health and retirement savings.”

The majority of respondents spend time educating their employees on allocating assets between their 401(k)/403(b) plan and HSAs. More than three-fourths of organizations provide education at open enrollment, according to the survey. Almost a third of organizations automatically enroll employees in the HSA if they enroll in the HSA-qualifying health option, it found.

HSAs Still New

HSAs are still relatively new to employers, with less than 20% offering an HSA for more than 10 years. Almost 40% percent of employers brought the HSA-qualifying health optioning to their workforce the past two-to-five years.

The benefits broker is usually the key component in the formation of the HSA program, the survey revealed. For the development of the HSA, the PSCA said that about 75% of organizations relied on their benefits broker.

Edmund F. Murphy III, president and CEO of Empower Retirement, stated that as employers and employees realize the power of using HSAs as a vehicle for savings, “we must remain committed to helping them understand the best way to use these accounts to begin saving for their health care expenses in retirement.”

Other key findings were:

  • 38.2% of organizations have offered an HSA to employees for two to five years while 34.4% have offered an HSA to employees for six to 10 years.
  • A quarter of organizations encourage or offer additional education to employees who do not contribute to the HSA or only contribute a nominal amount.
  • The average participant contribution in 2018 was $2,595, and the average account balance at the end of 2018 was $5,239.
  • The vast majority of responding organizations (85.6%) offer investment options for HSA contributions, though three-quarters require a minimum balance of at least $1,000 to invest assets beyond money market funds or cash.
  • Fewer than 10% of organizations use or suggest a default savings rate to employees for their HSA.

The survey was conducted in March and reflects data on 2018 activity. PSCA is part of the American Retirement Association. The survey was sponsored by Denver-based Empower Retirement, which administers $638 billion in assets for more than 9.1 million retirement plan participants as the nation’s second-largest retirement plan record keeper by total participants.

— Check out How Much Do Business Owners Know About HSAs? on ThinkAdvisor.


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