Many organizations still do not have a formal health savings account (HSA) program, leaving it up to the employee to set up and manage the account themselves, according to the Plan Sponsor Council of America’s (PSCA) annual Health Savings Account (HSA) Survey sponsored by Empower Retirement.
Moreover, 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. Among organizations that do have formal HSA programs, most make contributions, offer investment options and pay HSA-related fees.
“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, which is rarely the default option,” noted Nevin E. Adams, JD, head of Retirement Research at the American Retirement Association. “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.”
Key Findings
The average participant contribution in 2020 was $2,958, up from $2,595 in 2019 and 2018. The average account balance at the end of 2020 was $6,318, up from $5,627 in 2019.
Most employers (83.2%) make contributions to the HSA, including three-quarters of smaller organizations. Most organizations (96.8%) made no changes to employer contributions in 2020 as a result of the COVID-19 pandemic (2.6% reduced contributions and fewer than 1% suspended them) and most also kept the contributions the same for 2021 (93.4%).
The vast majority of organizations (84.4%) offer investment options for HSA contributions. Nearly 20% of participants invested assets in 2020, accounting for nearly 30% of all HSA assets.
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.
Education Gaps
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 (13.2%).
“It’s heartening to see employers and employees increasingly recognize the value of HSAs—not only as a way to save for today’s health expenses, but also as an integral part of a retirement saving plan,” said Tina Wilson, Senior Vice President and Chief Product Officer at Empower Retirement. “We need to continue to find new ways to educate those employees about the tremendous tax advantages of HSAs, while also making it easier for them to enroll.”
The data reported is from 191 employers that offered an HSA-qualifying health option in 2020. The full report is available on the PSCA’s website.
See also What’s Holding Back HSAs.
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