‘Learning’ Objectives: What’s Holding Back HSAs?

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.