Healthcare is complex. Costs, services, and fees make it hard to navigate. While an HSA is not your health insurance, it works with eligible high deductible health insurance plans to provide tax-free savings. The downside is that HSA education is often limited, leaving employees misinformed or unaware of HSA benefits and requirements.
Improved HSA education will better prepare employees for long-term health savings.
HSA Education Statistics
- Just half of employers feel knowledge about HSAs
- In fact, 2 out of 5 employees think HSA funds must be spent (or forfeited) by year end (like an FSA).
- More than half of employees (54%) were not aware that they can invest their HSA funds
- Sadly, HSA education skews with income. Lower-income employees are less educated about the tax benefits and long-term savings options of an HSA (when compared to employees with salaries $100,000 or above).
HSA Mis-Education Results
This means most employers are unaware and unprepared they can use their HSA to save for the expected $275,000 (per couple) health costs, in retirement. HSAs are not the only way to save for costs in retirement, but they are the only way to save dedicated pre-tax dollars for health costs year over year, including retirement.
HSA Growth and Education
HSAs aren’t exactly new (2004), but they are newer than more popular benefits like 401(k)s. However, HSA growth is actually trending at a faster rate than the retirement sector. There are over 22 million HSA accounts, as of January 2018. So where does that leave us?
HSA growth will not only continue but will likely accelerate if current HDHP and healthcare cost trends continue. Additionally, HSA education will help employees prepare for health costs in retirement and further increase HSA growth trends (and HSA investments).
Disclaimer: the content presented in this article are for informational purposes only, and is not, and must not be considered tax, investment, legal, accounting or financial planning advice, nor a recommendation as to a specific course of action. Investors should consult all available information, including fund prospectuses, and consult with appropriate tax, investment, accounting, legal, and accounting professionals, as appropriate, before making any investment or utilizing any financial planning strategy.