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Education Dominates HSA Concerns of Plan Sponsors

Practice Management

Attendees at the recent Plan Sponsor Council of America’s (PSCA) National Conference in Tampa got a sneak peek at the findings of the PSCA’s Inaugural Health Savings Account Survey.

The general session panel – Kenneth Forsythe, Head of Product Strategy at Empower; and Glen Kvadus, VP at Optum Financial Services (the sponsors of the survey), along with PSCA Executive Director Jack Towarnicky, offered a preview of results from the soon-to-be released survey.

According to their preview of the survey results, employee education was far and away the predominant concern of plan sponsors. Nearly two-thirds (61%) ranked it as a primary concern, and another 17% cited it as a secondary issue. Nothing else came close. “Difficulty of administration” was a distant second, and it was noted by a mere 16% as a primary concern, and 19% as a secondary one. Compliance, cited as a secondary concern by 30%, but a primary one by just 8%, also stood out.
‘Snap Judgments?

In 2016, a “snapshot” survey by PSCA revealed that:

  • more than 75% of plan sponsor respondents viewed HSAs as part of their retirement benefits strategy; 
  • approximately 60% believed HSAs should replace Flexible Spending Accounts;
  • approximately 60% of eligibles participated in an HSA-capable health option; and 
  • the average HSA balance at that time was $3,161. 

Trend Lines

According to Devenir’s 2018 Year-End Report, there were more than 25 million HSA accounts, nearly double the 13.77 million at year-end 2014. Similarly, at year-end 2018, an estimated $43.5 million had been contributed to those accounts, with another $10.2 million in investments – and, according to Towarnicky, the report projects that these accounts will grow by 40% over the next two years, reaching $75 billion by the end of 2020.

Participant contributions were an average of $2,595, and a median of $2,476, according to the roughly 200 survey respondents. Asked how many participants were contributing the maximum to these accounts, just 18% said that 20% or more were – and nearly a quarter (23%) of survey respondents admitted they didn’t know. 

Moreover, speaking to the decentralized nature of these accounts once funded, the majority (63.1%) of plan sponsor respondents said they didn’t know how many participants claimed all HSA assets. The next most common response: the 28.5% who said less than 25% of participants had.

That said, 81.7% of plan sponsor respondents say they contributed to the HSAs in 2018; most (69.3%) a set dollar amount/tier; and another 22% a set dollar amount per employee. Just 2.7% matched the employee contributions, and 6% indicated an “other” method of contribution.

Nearly all the plan sponsor respondents (85.7%) offered investment options in their HSAs, although – doubtless because those choices were driven by the HSA provider – fewer than 3% reported using the same options as their 401(k). Regarding a minimum investment balance threshold:

  • 43% - more than $1,000;
  • 33.1% - $1,000;
  • 9.3% - less than $1,000; and
  • Just under 15% (14.6%) said they had no minimum.