Efforts to Make HSAs More Inclusive

How decoupling HSAs from high-deductible health plans (HDHPs) could bring advantages to both the employee and employer.

The last session of the virtual 2021 PLANSPONSOR HSA Conference discussed the benefits of expanding health savings accounts (HSAs) outside of high-deductible health plans (HDHPs), and whether any movement is expected in this area in the future.

Katy Spangler, principal at Spangler Strategies, said she believes there’s potential for change, citing several legislative efforts advocating for an expansion. One bill in particular, introduced last June by U.S. Representatives John Curtis (R-Utah) and Kendra Horn (D-Oklahoma), specifically calls for decoupling HSAs from HDHPs.

Originally, HSAs were created to combat the costly deductibles associated with HDHPs, noted David Speier, managing director of benefits accounts at Willis Towers Watson. But now, the fact that HSAs are only allowed to be used with HDHPs is constraining others from taking advantage of the benefits, he argued.

“When you look back to when these plans were introduced, [HSAs] were supposed to be a way to empower people to use their health plans efficiently,” Speier contended. “These design constraints have limited their ability to do so.”

This challenge adds to the larger problem of accessibility with HSAs, which Speier noted could disadvantage those who are trying to effectively save in the long-term. Because some plans provide an HSA while others don’t, participants have an unequal opportunity for saving. By decoupling the HSA from HDHPs, or tweaking the benefit to add more flexibility, more participants could save for medical costs and even retirement.

Additionally, decoupling could allow organizations to redesign their plans, rethink strategies for better usage of the benefit and create an overall better health care outcome, both experts said. Retirement and health care plans are already convoluted enough, so taking some complexity out of the system could encourage the behaviors employers are looking for, Speier said.

As more employers improve their HSA offerings, they are more likely to impact premiums and decrease value equations, while also incentivizing high-value health care, Spangler said. In turn, employers would be making it tougher for participants to receive low-value care. This can also increase recruitment and retainment in the long-haul, she added.

The advantages of offering an HSA extend to the employer, too, both experts said. Speier noted that saving in an HSA has a dual purpose—it helps participants save for current expenses and medical emergencies that occur both before and during retirement, unlike a retirement plan, which only focuses on the future. Employers do eventually want their workers to retire, but they also want to help them build their savings in the short-term, which HSAs can help with, Speier added.

“With a 401(k), you can save in them, you can automatically enroll people in them, but they’re not a good savings incentive for the now,” he said.