The Plan Sponsor Council of America’s (PSCA) 5th annual health savings account (HSA) Survey of more than 500 employers indicates that more employers are framing HSAs as part of a holistic retirement savings approach and not just a spending account for current health care expenses.
In fact, the 2023 HSA survey—sponsored by HSA Bank—reveals that 4 in 10 (40%) employer respondents indicated that they position the HSA as part of a retirement savings strategy to employees, up by nearly half from two years ago, when the level was at 27%. Note that the findings are based on the 2022 plan year experience.
And with employers still finding challenges in educating employees and getting them to enroll, employers are borrowing strategies from retirement plan administration, such as automatic enrollment and defaults.
To that end, half of employers note that getting employees to open an HSA after enrolling in a qualifying health plan is a challenge. To address this, nearly half of organizations (46.7%) report they automatically enroll eligible employees in an HSA—up by more than 30% in just two years, from 41.5% in 2021 and 35.3% in 2020.
The survey also discovered an increase in employers using a default or suggested savings rate to encourage greater account funding, rising to 11% of respondents, up from 9% last year and 8% the year before.
“Concern for employees being able to fund their HSAs is growing among employers as the economy continues to struggle with higher costs of living, and many are putting supports in place to help,” notes Hattie Greenan, PSCA’s director of research and communications. “Employers see the benefits of HSAs to help employees cover health care expenses now and in the future and are structuring their programs to help employees do so.”
Additional findings from PSCA’s 2023 HSA survey include the following.
Participation: Nearly 90% of eligible employees had an HSA in 2022, with 80% making contributions to it, up from 72.8% in 2021.
Employer Contributions: Three-quarters of employers make contributions to the HSA, with most providing a set amount per coverage level.
Employee Contributions: The average participant contribution in 2022 was $2,323, down from the last few years.
Account Balances: The average account balance at the end of 2022 was $6,130, up from $4,924 in 2021.
HSA Concerns: Though employee education is still the most common HSA concern cited by employers, it dropped from 70% of respondents stating that it was the No. 1 concern in 2021 to 58.3%.
Investments: 60% of responding organizations offer investment options for HSA contributions, though most participants choose not to use this option, as 70% of all HSA assets remain in cash.
And even though investing HSA assets is a great way to grow account balances, most employees are either hesitant or unable to do so, with fewer than 20% of employees investing assets when offered the opportunity.
“The cost of retiring continues to grow as health care becomes more expensive and it’s critical that employers incorporate HSA investment education into retirement and financial planning programs,” said Ann Brisk, senior director of innovation and strategy at HSA Bank. “This new research highlights the opportunity to educate employees about the benefits of HSAs as an investment account and change the perception of how these accounts can be used to empower consumers to think holistically about long-term financial planning, especially during open enrollment season.”
PSCA will host a webinar on Nov. 15, presented by HSA Bank, to review the results of the survey and how the findings can be used to benchmark HSA programs.
The survey can be accessed at: https://www.psca.org/research/HSA/2023report.
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