Why you should consider a dedicated Health Savings Account provider
by Craig Keohan
According to a survey by the National Association of Plan Advisers, 60% of plan sponsors say education about health savings accounts (HSAs) is a pressing need. 50% of Americans say they are not knowledgeable about HSAs and 40% believe HSA funds are lost if not spent by end of year*. Data from a recent HealthSavings survey of employers indicates that, on average, more than 50% of eligible employees haven’t even opened an HSA. The primary reason cited is education. Employees struggle to understand what an HSA is and how it can help them save money tax free for medical expenses now and in retirement.
When HSAs first came into existence, they were lumped into a benefits package along with Flexible Spending Accounts (FSAs) and Health Reimbursement Accounts (HRAs). This was a critical mistake early on that has led to persistent misunderstandings. HSAs, unlike FSAs and HRAs, are actual bank accounts where real dollars are deposited. They are not “notional” accounts where the employee must incur an eligible expense before funds are paid out.
This is an important distinction. Because with an HSA, the employee is in possession of real dollars and they control how those dollars are used. They can make their own contributions to save on taxes. They can invest in mutual funds to build a nest egg for retirement. They can use the money tax free at any time for qualified expenses. Or, they can watch their balances build over time and reimburse themselves when they retire for all the expenses they paid for out of pocket from the day the HSA was opened. The HSA stays with them for life. None of these features apply to FSAs or HRAs. In many respects, an HSA is much more like a 401 (k) or IRA.
Unfortunately, most administrators lump the HSA offering in with the FSA and the HRA. It’s no wonder employees are confused. Its’ an alphabet soup of offerings, all presented on the same shelf, with little attention paid to the very important differences. The key to improving employee understanding of the HAS is to uncouple it from these other accounts and ensure it is offered by a qualified administrator with a singular focus on the important lifetime benefits associated with an HSA for all eligible employees, no matter where they are on their health savings journey.
HealthSavings is exclusively focused on Health Savings Accounts and with a 15 –year track record, and average account balances five times higher than the industry, the advantages of our singular focus translate directly to benefits for our account holders. How do we do it? HealthSavings offers a persona-based experience to serve the needs of employees at every stage of their health savings journey. Whether they are a family looking to pay frequent medical expenses tax-free or an individual seeking to invest HSA dollars in low-expense mutual funds, we offer a targeted approach that educates and supports employees to help them meet their goals for health and financial wellness, now and in the future
*HSAs: An Emerging Retirement Planning Strategy