HSAs and Retirement: A Benefits Crossroads
Health savings accounts and defined contribution plans are different roads. But they’re not far apart, nor are they just parallel – they do intersect.
Greg Fowler, Vice President of Partner Services at HealthEquity, discussed the HSA/DC plan intersection at a Jan. 24 session of the 2018 NTSA Summit in Houston. Fowler discussed incorporating HSAs into the retirement planning process.
Health and retirement plans are related by more than the simple fact that they are employer-provided or employer-facilitated benefits. The most important link is that health care costs affect retirement savings, and they are rising. In fact, said Fowler, $4.7 trillion is spent on health care by retirees per year. And Fowler added that he expects that retirement professionals are going to see more of that.
HSAs matter, Fowler said. He outlined their synergy with retirement plans and the ways they can complement each other in providing a means to prepare financially for the future. For instance, Fowler observed, employers may offer the same or similar investments through an HSA that it offers to its 401(k) and 403(b) participants.
HSAs are growing in number and importance, Fowler noted. And he said that two-thirds of HSA account holders ended 2016 with positive net contributions and rolled money over into 2017.
And there is more to come, Fowler said, noting that there is a shift in contributions coming in the amounts contributed to 403(b)s and 401(k)s, and to HSAs. “With education, we’re seeing contributions on both sides,” said Fowler.
Fowler suggested that plans expand their retirement plan materials to include health care costs and HSA balances. He also suggested that information about retirement contribution levels include HSA assets and that participants be educated about coordination of benefits between defined contribution plans and HSAs.