How much do your employees know about their health savings accounts (HSAs)? Do they know they can invest their HSA funds?
A recent survey revealed only 32% of respondents understand that HSAs can help with long-term expenses, and only 17% are investing HSA funds for growth. That’s according to Alegeus’ 2021 HSAs and Investing Survey. The survey also found most employees are actively saving for retirement (53%) and some even consider themselves savvy investors (45%).
That shows a major gap in employees’ understanding of their benefits. It also presents an opportunity for Benefits pros to educate their employees to get the most of out of their benefits.
Eighty-three percent of those surveyed who have an HSA don’t invest their funds for growth. This could be from a lack of funds – most HSAs set a minimum threshold of $1,000 to invest. It’s also due to a lack of knowledge about how HSAs work and that their funds can be invested.
To demonstrate just how little employees know about HSA investing:
- 33% said they were “very familiar” with HSAs
- 32% said they understood that HSAs were good for short- and long-term expenses, and
- 42% said they know HSAs can be used for investing.
“I see a major opportunity here to put the ‘savings’ back in ‘health savings account,’” said Lief O’Leary, Alegeus CEO. “We’re happy to see that consumers understand the value of long-term savings and investing. That’s a critical first step. But now it’s up to us as health benefit experts to provide the education and resources to help consumers take advantage of their HSA in pursuit of their saving and investing goals.”
Here’s some advice on what to tell employees:
- Invest the maximum allowed if possible.
- HSAs have “triple tax free” status – they’re funded with pre-tax income, grow tax-deferred, and employees can withdraw funds tax free to pay for eligible expenses, and
- Fund rollover year to year automatically.