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A summary of the articles included in the December 2021 edition:
- KFF: 2021 Employer Health Benefits Survey
- HSAs Are Unappreciated and Underutilized. Advisors Can Change That.
- Best Practices Emerging Around HSA Design and Administration
- State Health Mandates Challenging Health Savings Account Eligibility
- Health Savings Accounts Take a Hit From Pandemic, Unemployment
- HealthEquity Completes Further Acquisition
KFF: 2021 Employer Health Benefits Survey
Key Findings
- 22% of firms offering health benefits offer an HDHP/HRA, an HSA-qualified HDHP, or both. Among firms offering health benefits, 6% offer an HDHP/HRA and 17% offer an HSA-qualified HDHP. The percentage of firms offering an HDHP/SO is similar to last year.
- 28% of covered workers are enrolled in an HDHP/SO in 2021, similar to the percentage last year (31%).
- Enrollment in HDHP/SOs has increased over the past decade, from 17% of covered workers in 2011 to 28% in 2021.
- The average annual premiums for workers in HSA-qualified HDHPs are $6,877 for single coverage and $20,507 for family coverage. These amounts are significantly less than the average single and family premium for covered workers in plans that are not HDHP/SOs.
- Covered workers enrolled in HSA-qualified HDHPs on average receive an annual employer contribution to their HSA of $575 for single coverage and $987 for family coverage.
HSAs Are Unappreciated and Underutilized. Advisors Can Change That.
With open enrollment for workplace benefits in full swing for many clients, some financial advisors are encouraging the use of health savings accounts, or HSAs, as part of an overall financial plan.
HSAs were created in 2003, but they aren’t as widely understood or embraced as 401(k) plans or IRAs. That’s where advisors are getting involved—offering guidance on the ins and outs of these tax-advantaged accounts and even helping clients pick the investments, in some cases.
Many are discussing HSAs with clients as part of the onboarding discovery process, during open enrollment, or at tax time. Generally, advisors aren’t directly compensated for this advice, unless they are charging a financial planning fee. But even those that don’t get paid say advice on HSAs is part of the holistic wealth management experience they offer.
Best Practices Emerging Around HSA Design and Administration
The 3rd annual Plan Sponsor Council of America (PSCA) HSA Benchmarking Survey finds some consistent trends emerging.
With three years of data now, PSCA’s annual HSA survey is revealing some trends in design and administration. Even as best practices regarding HSA program administration begin to emerge, many organizations do not have a formal program, leaving employees enrolled in high-deductible health plans to set up and manage the HSA account themselves. And, while three-quarters of employers offer health options in addition to the HSA-qualifying option, at nearly 70% of small organizations the HSA health option is the only option, and many of these employees are left on their own to figure out the complexities of a health savings account.
State Health Mandates Challenging Health Savings Account Eligibility
To help chronically ill Americans afford the high costs of prescription drugs, 11 states have adopted so-called copay accumulator “adjustment” laws. The rules allow consumers to use coupons from drug manufacturers to reduce their out-of-pocket expenses at the pharmacy but require their health insurance companies to credit the full cost of the drugs toward their deductibles.
In April, the Internal Revenue Service outlined in a letter to the Illinois Department of Insurance how such schemes constitute “other coverage” under the HSA statute and will disqualify HSA owners from contributing to their accounts, absent any exception for HSA-qualified plans.
Health Savings Accounts Take a Hit From Pandemic, Unemployment
HSAs have taken a heavy hit from the pandemic, unemployment and the worry caused by both. Investing fell sharply for the 80% of account holders who do not already heavily invest in their HSA funds, according to the 2nd annual HSA Account Holder Insight report from Lively.
Key Findings
- The majority of HSA account holders are using their accounts to focus on yearly and expected tax-advantaged health-care spending. Account holders are spending nearly as fast as they contribute.
- The most investment-savvy HSA account holders are focused on maximizing their HSAs for retirement.
- Cash balances remained flat from 2020, but average spend increased for some groups and decreased for others.
- Debit card spending fell slightly in 2021.
- Families have higher HSA cash balances and use HSA investments more than individuals.
HealthEquity Completes Further Acquisition
HealthEquity completed the acquisition of Further, a provider of HSA and consumer-directed benefit administration services, and the nation’s ninth largest HSA custodian.
The acquisition of Further and its technology expands HealthEquity’s leadership in the growing HSA market and enhances its ability to drive growth with health plans and other go-to-market partners.