Are employees using their HSAs to the fullest?
It’s not that people are spending their HSA savings on the wrong things.
Contributions to health savings accounts are up. However, the rising cost of health care is keeping account owners from taking full advantage of HSAs. But there are some things employers can do to help.
So says a report from UMB Healthcare Services. It points out that although account owners are spending on the right things, what they’re not able to do is hang onto the money long enough to head off higher future costs—or take advantage of HSAs’ other features.
Those features include the ability to invest the assets in a HSA, assuming that those assets stay in the account long enough rather than going to pay for health care.
Not only are more people saving more in HSAs—more than 22 million people were enrolled in HSAs at the end of 2017, with total assets reaching around $45.2 billion—but they’re spending more on current health care expenses.
And that’s not likely to change. The report notes, “According to the CMS Office of Actuary, heath care spending is projected to hit $5.7 trillion by 2026, a 5.5 annual percent rise from the current $3.5 trillion.”
Average HSA balances have hardly risen since 2016, when they totaled $1,472. In 2017, they reached $1,741.
Employers, says the report, can give employees a bit more impetus to focus on their HSAs, citing Devenir research at year-end 2017 that says, “employer relationships became the leading driver of new account growth, accounting for 41 percent of new accounts in 2017.”
A major way that happened was from employer contributions, wiith “[t]he average employer contribution … $604 with the average employee contribution of $1,921, for a combined annual total of $2,525. In accounts not associated with an employer, the average contribution was $1,475.”
In other words, employer contributions and ongoing matching support spurred higher savings rates among employees.
Other actions employers can take to boost employee savings in HSAs, the report says, include the following:
- Provide educational resources all year long to increase employee financial wellness.
- Offer an online investment platform that allows employees to invest those HSA savings.
- Assist employees during open enrollment to help them learn more about HSAs.
HSAs were meant to be used for approved medical expenses. But the additional benefits built into them, such as the ability to invest funds, are benefits HSA owners are currently missing out on.
READ MORE:
2019 HSA contribution limits: What advisors, employers, and employees need to know