As it becomes harder and harder to pay for healthcare, more employers are viewing Health Savings Accounts (HSAs) as part of a “holistic retirement savings” strategy for employees.
Widespread Challenges
It’s not hard to find data and news about medical debt, and, increasingly, evidence points out that much of it is incurred despite having health insurance. For example, CNBC has reported: “Overall, an estimated 41% of people — or about 100 million adults — face medical debt … .Almost two-thirds, or 63%, of adults with past-due medical debt incurred it when they had insurance…”. Commonwealth Fund underscores that it is no longer accurate for employers to assume that having health insurance prevents workers from accruing medical debt:
Americans, regardless of where their insurance comes from, have inadequate coverage that’s led to delayed or forgone care, significant medical debt, and worsening health problems. While having health insurance is always better than not having it, the survey findings challenge the implicit assumption that health insurance in the United States buys affordable access to care. Difficulties affording care are experienced by people in employer, marketplace, and individual-market plans as well as people enrolled in Medicaid and Medicare.
The Plan Sponsor Council of America (PSCA) observes that employers, mindful of the worsening medical debt situation, are leaning in, with increased focus on Health Savings Accounts:“Concern for employees being able to fund their HSAs is growing among employers as the economy continues to struggle with higher costs of living, and many are putting supports in place to help….Employers see the benefits of HSAs to help employees cover health care expenses now and in the future and are structuring their programs to help employees do so.” In fact, PSCA’s most recent HSA survey, involving over 500 employers, found:
- More employers are framing HSAs as part of a holistic retirement savings approach and not just a spending account for current health care expenses.
- 4 in 10 (40%) employer respondents indicated that they position the HSA as part of a retirement savings strategy to employees, up by nearly half from two years ago, when the level was at 27%.
- And with employers still finding challenges in educating employees and getting them to enroll, employers are borrowing strategies from retirement plan administration, such as automatic enrollment and defaults.
Best Practice for Plan Sponsors
While updating retirement planning strategies for employees, it’s also wise to update your own protection plans for the year ahead. At Colonial, a whole year of Fiduciary Liability coverage is less than a few dollars a day, and we even include Cyber Liability coverage to protect the business and retirement plan.
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