Employee Benefits & Finance
The HSA is the best retirement account for you and your employees, and it's time you do something about it!
The things holding back the growth of the HSA as a retirement vehicle are aplenty: misconceptions, incorrectly structured health plan designs, lack of employee education, and lazy health brokers. The HSA is not a new concept… in fact, they have been around since 2003.
When compared to a 401 (K), Traditional IRA, and Roth IRA, the Health Savings Account is better as a retirement vehicle, both in the short and long term. There is no other account on the market that allows for tax-savings on contributions, growth, AND distributions (when used for medical, dental, long-term care, vision, Medicare premium). At age 65, you can use the HSA for anything (you pay income tax), just like your IRA. You can invest the funds in your HSA in the exact same way you can your other retirement accounts. For the most savvy investor-you can even pay for medical bills out of pocket, and reimburse yourself tax-free down the road (even 30 years later!).
Why isn’t your financial advisor telling you this? They don’t make any money when you and your employees put your money in an HSA. They want you to have as much free cash as possible to put into accounts that they do make money: IRAs, 401 (k), stocks, bonds, and cash value life insurance.
Why isn’t your current benefit broker/advisor/consultant/agent telling you more about the HSA? In order to do a great job with this approach, it requires much more work on their end. The easiest route for brokers is to have you renew “as is” with your traditional copay plan, or to keep the HSA option available without educating anyone on it (group meeting once per year, and a benefit packet). They get paid the same whether they do a great job or a poor job. This is not doing you any good, and it’s a disservice to your employees.
One of the main concerns for employees when it comes to Health Savings Accounts is they are tied to a less than appealing term- “high deductible health plan”. In order to have an HSA, you need to be enrolled in a HDHP or high deductible health plan. This term is only accurate from a technical sense. The problem with this term is that it is misleading and causes people to fear having to pay huge amounts out of pocket for medical bills. When plans and contributions are structured correctly, this couldn’t be further from the truth! I often see the exact opposite… traditional copay plans have much higher out of pocket exposure and premium costs than said “high deductible health plans”. Our team doesn’t ever use the term HDHP when talking with employers and employees because it is often an inaccurate, confusing, and misleading adjective.
If you and your employees aren’t fully leveraging the power of a Health Savings Account, it’s time for a change.
We achieve great results for our clients with our consulting program:
These results can be achieved whether you are fully-insured, self-funded, or are considering moving to a reference-based pricing model.
Thank you reading, please comment below with any comments or questions.