'Learning' Objectives: What's Holding Back HSAs?

New white paper highlights opportunities to improve utilization

ARLINGTON, VA, January 22, 2020 /24-7PressRelease/ -- The Plan Sponsor Council of America (PSCA), part of the American Retirement Association (ARA), today released a whitepaper analyzing the growth to date and potential future for Health Savings Accounts (HSAs) – as well as some factors that appear to be hampering that growth.

Sponsored by the Empower Institute, the paper was co-authored by Nevin E. Adams, JD, Chief Communications Officer of the ARA and Jack Towarnicky, Principal Researcher.

While December 2019 marked the 16th anniversary of legislation that created HSAs, many – both plan sponsors and workers – seem to regard the HSA as a new, untested innovation. Many are not well-versed in HSA-capable health coverage requirements. Even today, workers with access to an HSA option often misunderstand the opportunity, confusing it with the requirements of the better known and more prevalent medical Flexible Spending Accounts (FSAs).

"Due to the growing importance and prevalence of HSA plans since their creation in 2003, PSCA has identified this as a key area to study, watch and discuss," said Jack Towarnicky, Principal Researcher. "Many of our plan sponsor members recognize the important role HSAs can play as retirement savings vehicles."

More than 75% of employers fail to offer their workers access to America's most valuable benefits tax preference – the HSA. Other research findings include:

• 60% of respondents said that employee education was their dominant concern about this important health care option.
• Only 11% of employees and only 7% of employers surveyed could correctly identify four basic attributes of HSAs.

"Employers indicate that education is a primary, and significant concern regarding HSAs among their workforce, but current trends in plan design and positioning could benefit from the application of behavioral finance insights that have been successfully applied to improve retirement savings outcomes. We hope this paper can inspire a creative reassessment of the positioning and take-up of this valuable offering."

The whitepaper draws on data from PSCA's inaugural HSA benchmarking study. Acknowledging the HSA's significant potential role as a retirement savings vehicle, PSCA created an HSA committee in 2016. In the spring of 2017, PSCA conducted its first snapshot survey of companies that offer HSA-qualifying health plans to establish a baseline on HSA plan design and use, followed by a comprehensive benchmarking survey in 2019. More information on the 2019 Health Savings Accounts Survey Report can be found here.

The whitepaper is available for download here.

About the Plan Sponsor Council of America

The Plan Sponsor Council of America (PSCA), part of the American Retirement Association, is a diverse, collaborative community of employee benefit plan sponsors, working together on behalf of millions of employees to solve real problems, create positive change, and expand on the success of the employer-sponsored retirement system. With members representing employers of all sizes, we offer a forum for comprehensive dialogue. By sharing our collective knowledge and experience as plan sponsors, PSCA also serves as a resource to policymakers, the media and other stakeholders as part of our commitment to improving retirement security for millions of Americans. For more information, visit psca.org.

About the American Retirement Association

The American Retirement Association, based in the Washington, D.C. area, is a non-profit professional organization established to empower retirement plan professionals who are dedicated to building a better retirement for Americans. The American Retirement Association is comprised of five premier retirement industry associations; the American Society of Pension Professionals & Actuaries (ASPPA), the American Society of Enrolled Actuaries (ASEA), the National Association of Plan Advisors (NAPA), the National Tax-deferred Savings Association (NTSA), and the Plan Sponsor Council of America (PSCA).

For more information, visit www.usaretirement.org.

About the Empower Institute
The Empower Institute is brought to you by Empower Retirement to critically examine investment theories, retirement strategies and assumptions. It suggests theories and changes for achieving better outcomes for employers, institutions, financial advisors and individual investors.

For more information, visit empower-institute.org.

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