The 3rd annual Plan Sponsor Council of America (PSCA) HSA Benchmarking Survey finds some consistent trends emerging.
With three years of data now, PSCA’s annual HSA survey is revealing some trends in design and administration. Even as best practices regarding HSA program administration begin to emerge, many organizations do not have a formal program, leaving employees enrolled in high-deductible health plans to set up and manage the HSA account themselves. And, while three-quarters of employers offer health options in addition to the HSA-qualifying option, at nearly 70%% of small organizations the HSA health option is the only option, and many of these employees are left on their own to figure out the complexities of a health savings account.
PSCA conducted its 3rd annual HSA benchmarking survey in early 2021 to examine how employers structure HSA programs, their use by employees, and their potential as retirement savings vehicles. The survey received responses from 191 plan sponsors with a formal HSA program for employees. For these organizations, the trends show that most make contributions, offer investment options, and pay HSA-related fees.
Despite gains in other areas, employers’ main concern regarding their HSA program remains participant education. More than 80% of employers cited employee education as a top HSA concern. The top education priority for more than 60% of survey respondents is explaining HSA tax preferences, followed distantly by explaining contribution limits.
Setting up an HSA can seem dauting to employees, and indeed, when given the choice, nearly half of employees choose something other than the HSA-qualifying health option. We know that HSAs can be a powerful tool for additional retirement savings, but if we want people to use them as such, they need the education and support to do so. We need to continue to find new ways to educate employees about the tremendous tax advantages of HSAs, while also making it easier for them to enroll.
A summary of the data from the full report follows.
Top 10 Highlights
1. The average participant contribution in 2020 was $2,958, up from $2,595 in 2019 and 2018. However, roughly a quarter of responding employers noted that fewer than 5% of workers maxed out contributions.
2. The average account balance at the end of 2020 was $6,318, up from $5,627 in 2019.
3. Most employers (83.2%) make contributions to the HSA, including three-quarters of smaller organizations and more than 90% of large ones.
4. The vast majority of responding organizations (84.4%) offer investment options for HSA contributions.
5. Nearly 20% of participants invested assets in 2020, accounting for nearly 30% of all HSA assets.
6. More than 80% of employers cited employee education as a top HSA concern, consistent with previous findings. Compliance, Medicare eligibility, and difficulty of administration vie for top secondary concerns.
7. The top education priority for more than 60% of survey respondents is explaining HSA tax preferences, followed distantly by explaining contribution limits (13.2%).
8. Thirty-five percent of organizations automatically enroll employees in the HSA if they enroll in the HSA-qualifying health option, up from 32.2% in 2019.
9. Fewer than 40% of employers position the HSA as a retirement savings vehicle.
10. Two-thirds of organizations cover HSA maintenance fees themselves. The fees are generally assessed monthly (79.4% of plans), and cost less than $3 a month/participant on average.
Eligibility and Participation
Nearly 80% of employers offer health options in addition to the HSA-qualifying option, although there is some variability by organization size. Among employers that offer multiple options, nearly 40% state that more employees choose the HSA-qualifying health option, while 45.7% say that more employees choose the other option(s). See Exhibit 1.
Exhibit 1
| Take-Up Rates of HSA-Qualifying Option vs. Other Health Options | All |
|
HSA Option is Highest Other Options are Higher About the Same Unsure |
38.4% 45.7% 11.6% 4.3% |
| Total | 100.0% |
Nearly 60% of employees enrolled in the HSA-qualifying health option when offered the opportunity. Of those that did, 85.1% had an HSA in 2020 and 81.1% made contributions to their account. See Exhibit 2.
Exhibit 2
| HSA Participation Measurement | 2018 | 2019 | 2020 |
| Percentage of Eligible Employees who Enrolled in the HSA-Qualifying Option | 53.7% | 61.3% | 58.6% |
| Percentage Enrolled in HSA-Qualifying Options with an HSA | 90.7% | 90.5% | 85.1% |
| Percentage of Employees with an HSA who Contributed to it | 85.7% | 91.1% | 81.4% |
The average participant contribution in 2020 was $2,958, up from $2,595 in 2019. The average account balance at the end of 2020 was $6,318 and the median was $3,543—up a bit from the average of $5,627 and median of $3,169 reported in 2019. See Exhibit 3.
Exhibit 3
| HSA Accounts Over Time | 2018 | 2019 | 2020 |
| Average Participant Contribution | $2,595 | $2,595 | $2,958 |
| Average Account Balance | $5,239 | $5,627 | $6,318 |
More than a third of organizations automatically enroll employees in the HSA if they enroll in the HSA-qualifying health option.
Employer Contributions
Most employers (83.2%) contribute to the HSA—nearly three-fourths of those that do provide a set dollar amount based on the coverage level (single or family). See Exhibit 4. More than a third of employers “front-load” contributions at the beginning of the year while nearly 40% make contributions each pay period.
Exhibit 4
| Organization Size (Number of Total Employees) | %age of Organizations that Contribute to the HSA |
| 1-49 | 77.3% |
| 50-199 | 75.9% |
| 200-999 | 79.7% |
| 1,000-4,999 | 91.5% |
| 5,000+ | 91.3% |
| All | 83.2% |
Investments
The vast majority of responding organizations (84.4%) offer investment options for HSA contributions beyond a cash equivalent or money market fund. However, 78.4% of organizations require a minimum balance of $1,000 or more before assets can be invested. Nearly 20% of participants invested assets when given the option. And nearly 30% of all HSA assets are invested in something other than cash or cash equivalents. See Exhibit 5.
Exhibit 5
| Average Percentage of Participants Who Invested and Percentage of Assets Invested | All |
| Average Percentage of Participants who Invested Assets | 19.3% |
| Average Percentage of Assets Invested in Something Other than Cash | 28.7% |
Education
The majority of organizations (56.6%) primarily educate employees about HSAs annually during open enrollment. However, a quarter provide education throughout the year. The dominant topic targeted by HSA education was understanding the tax benefits of HSAs, indicated as primary by more than 60% of respondents.
Fewer than 10% of organizations use or suggest a default savings rate to employees for their HAS, and 6% offer additional education to employees who do not contribute to the HSA or only contribute a nominal amount.
Nearly 40% of respondents indicate that they position the HSA as part of a retirement savings strategy to employees; 11% don’t currently do so, but plan to.
Nearly 80% of respondents indicated that employee education is a top concern, with nearly two-thirds of respondents indicating that it is their primary concern regarding their HSA programs. See Exhibit 6.
Exhibit 6
| Primary and Secondary HSA Concern | Primary | Secondary | Primary or Secondary |
| Difficulty of Administration | 10.8% | 12.8% | 23.6% |
| Compliance | 7.8% | 19.9% | 27.7% |
| Employee Education | 63.3% | 16.0% | 79.3% |
| Employee Funding Resources | 4.2% | 11.5% | 15.7% |
| Investment Options | 3.0% | 12.2% | 15.2% |
| Fiduciary liability | 6.0% | 9.0% | 15.0% |
| Medicare Eligibility | 4.2% | 17.3% | 21.5% |
| Other | 0.6% | 1.3% | 1.9% |
HSA Fees
More than 60% of organizations pay the HSA maintenance fees for active employees, although at 29% of responding organizations the participant is responsible for those fees. Most fees are paid monthly (71%), and average less than $3 a month.
PSCA’s 2021 HSA Benchmarking Survey is available for free, thanks to the generous sponsorship of Empower Retirement and Optum Financial. Access the report at: https://www.psca.org/research/HSA/2021report.
Hattie Greenan is PSCA’s Director of Research and Communications.
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