By - April 2, 2020

Do Your Employees Know They Can Use an HSA for Retirement?


The health savings account (HSA) has been called “the absolute best retirement account,” “the ultimate retirement account,” and “[a]n off-label prescription for retirement saving.”  

As Dana Anspach writes for The Balance, “Where else do you get to contribute tax-deductible dollars and withdraw them tax-free? Nowhere else that I know of.” 

As a benefits professional, you might thoroughly understand the advantages of using an HSA for retirement. 

But are your employees aware of the perks? 

Research indicates your workers might need a little help understanding how they can use an HSA for retirement. Check out these stats!  

1. Many Employees Don’t Understand Why They Should Open an HSA (Source)  

A big indicator that employees need education on using an HSA for retirement? 

Research from Willis Towers Watson reveals that employees aren’t convinced they should open an HSA. In a report, the organization writes, “57% of employees who were offered an HSA, did not enroll because they did not see any advantage to doing so.”  

Addressing this challenge requires better education about HSAs—including their retirement advantage. As you help employees learn more about “the ultimate retirement account,” you’ll create an incentive for workers to open their HSAs. 

2. When It Comes to HSAs, Employees Only Focus on the Cash (Source

Even if an employee opens an HSA, that doesn’t mean he or she actively uses the HSA for retirement. In fact, research from the Employee Benefit Research Institute (EBRI) indicates that your employees might “be using HSAs as specialized checking accounts rather than investment accounts.” 

The EBRI bolsters this claim with data. It reports, “In 2017, 5 percent [of HSAs] had investments other than cash.”  

When it comes to retirement, it’s critical for employees to invest their assets so they earn a return. With HSA education, you can help employees go from seeing their HSAs as “specialized checking accounts” to investing their HSA dollars. 

3. Employees Aren’t Aware of HSA Investment Opportunities (Source)

Perhaps one reason employees aren’t using their HSAs for retirement comes down to a simple fact: Employees lack any awareness of HSA investment opportunities. 

In a recent report, Bank of America revealed 63% of employees surveyed failed to demonstrate they knew “[f]unds in the account can be invested.” 

In light of this, consider holding off on discussing various HSA investments with your employees. At the outset of your benefits communication strategy, you may need to go back to the basics and explain that HSAs allow investing in the first place! 

4. Employees Think Like Consumers about Their HSAs (Source and Source)

Here’s another reason for benefits professionals to increase education on using an HSA for retirement: Studies demonstrate that employees have a consumer mentality about their HSAs. 

When the Insured Retirement Institute asked employees about the primary use of their HSAs, 74% indicated this was “[paying] for current healthcare expenses.” 

Another recent report also bolsters this finding. According to Willis Towers Watson, most employees spend their HSA funds. The company writes, “Only 8% of employees focus on saving their HSA funds for future health care expenses.”   

What can you do as a benefits professional? 

Go beyond educating your employees that HSAs allow investing. Highlight how using an HSA for retirement can actually outweigh the advantages of using HSA dollars to pay the latest medical bill.  

Empowering Each Employee to Use an HSA for Retirement 

It’s clear employees need guidance on contributing to an HSA for retirement. So how can you empower your workers? 

Here are a few tips: 

  • Encourage your employees to enroll. Helping your workers open an account is a great starting place. Ensure your employees understand how to open and contribute to an HSA.  
  • Show them the savings. Seeing how HSA funds can grow is a powerful incentive to use an HSA for retirement. Benefits decision support tools, such as Tango Decision Assist™, have education and calculators to show employees how their HSAs can grow for retirement. Bank of America has a nice calculator your employees can explore. 
  • Create an HSA communications campaign. Helping your employees better leverage their benefits doesn’t happen overnight. You’ll want to implement consistent communication over the long term to boost your employees’ HSA literacy. Check out the content on the HSA Communications page.

Need help as you encourage enrollment, show the savings, and ignite interest in putting an HSA to work for those golden years?  

At Tango Health, we have developed a guide to motivate employees to think differently about their HSAs. This resource will educate your employees on using their HSAs for retirement and give pointers for investing.  

Download and share with your employees: What You Need to Know about Investing Your HSA Funds 

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