Since the COVID-19 pandemic gripped the world, people have become more aware of health savings accounts (HSAs), said Phil Mason, executive vice president, chief operating officer and director of health care services at UMB Healthcare Services, during the virtual 2021 PLANSPONSOR HSA Conference.
“People are now thinking through how they would handle a giant, one-time medical expense,” he said. “We would like to see optimal behavior by HSA account holders, which is different for everyone. There are lot of people who don’t have an HSA who should. We need to educate them about the triple tax advantages of HSAs, get them to think of them as retirement vehicles—and prompt them to take advantage of the investment component of HSAs.”
HSA providers need to provide a lot more education about HSAs, noted panelist William Giaconia, vice president, channel development at Fidelity. “One-third of people don’t know that they are not a ‘use it or lose it’ account, and one-third don’t know they can invest the money,” he said.
He said he is hopeful that adding artificial intelligence (AI) to HSA accounts will enable providers to “comb through a lot of data on people and provide them with customized communications to meet them where they are on their HSA journey.
“Communication needs to be more personalized,” Giaconia continued. “People might, for instance, be receptive to information on how to invest. There is a lot of promise in these AI technologies, and they can be scaled to help with overcoming this education deficit plaguing HSAs.”
Brad Arends, co-founder and chief executive officer of intellicents, likened the lack of participant knowledge about HSAs to where 401(k) plans were 20 years ago.
“One factor that was critical to getting 401(k)s on the right path was advice,” Arends said. “There isn’t a single provider out there that will actually give advice—on how to invest, how much to save, what health care plan to select. That is what is missing in the HSA world. This is mission critical in order to get these people engaged, and whether they realize it or not, 401(k) advisers are ideally suited to do this through educational group meetings followed up with one-on-one consultations.”
Besides that, consultants can recommend employers give HSA participants a match or seed money in order to boost participation in the plans, Arends said.
Mason agreed that putting seed money in the plan will increase participation. He also said consultants can boost HSA participation by showing employees how much they can save by choosing a high-deductible health plan (HDHP) paired with an HSA.
Arends added that sponsors can automatically enroll participants in HSAs and give them the right to opt out. He said it would also be helpful for sponsors to default participants into a target-date fund (TDF) if they are using auto-enrollment and if they are not, to reduce the number of options on the investment menu.
Giaconia of Fidelity said he is encouraged by disruptors like Amazon getting into the health care space because they are educating participants about how important it is to shop for health care. “Any innovation and competition can definitely have a positive impact over a period of time, and Amazon’s move can be good for the health care market,” he said.
Arends agreed: “This notion of consumerism with HSAs will prompt participants to ask questions about the difference between medical services and their costs. There can be a price differentiator between health care plans of as much as 40% to 50%.”
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