The HSA in Your Future: Defined Contribution Retiree Medical Coverage - Part 3

Resolving the Retiree Medical Preparation Crisis – the Third of Three Posts 

Few Americans are successfully preparing for retiree medical.  It is a crisis!

For comparison, what would you do if you offered an employer-sponsored retirement savings plan and you failed to achieve the desired level of participation and preparation?  

• Yell at your workers?  
• Wash your hands?  
• Wring your hands?  
• Throw up your hands?  
• Eliminate the retirement savings plan since it was an expensive failure?
• Take the Department of Labor, Employee Benefits Security Administration’s advice (or anticipate 2017 legislation by Senators Johnny Isakson (R-GA) and Chris Murphy (D-CT) and Congressmen Luke Messer (R-IN) and Mark Pocan (D-WI)) and give workers a projection that confirms they may run out of money in retirement and urge them to save more? (see:  https://www.federalregister.gov/documents/2013/05/08/2013-10636/pension-...)

I don’t think so.  I bet you will first look around to see what others are doing.  You’ll look to see what succeeded elsewhere?  With regard to retirement saving, some surveys show plan sponsors have figured it out – for example, Vanguard’s 2017 survey, How America Saves, shows that automatic enrollment was used by 15% of plans in 2007, 45% in 2016 – and, more plans now apply automatic features to all employees (not just new hires) and more plans now incorporate automatic escalation.  Vanguard reports significant improvements in retirement preparation.  

So, take the hint.

But, instead of applying automatic features only to your 401(k) plan, deploy the same behavioral economics tools and processes to enrollment in active employee health coverage and health savings account contributions (see my prior blog on other steps/actions).  

Set your health coverage default to a HSAs-qualifying health option, and default workers into a contribution rate for the Health Savings Account that will be sufficient for both current year out-of-pocket medical, dental and vision expenses, plus additional monies for future medical expenses.

Interested? if you are a PSCA member, send me an email ([email protected]) and I will show you why you should take this action. Not a PSCA member?  See what you are missing?