HSA Technology is Now Boosting Participation
HSA Technology is helping by providing give a boost to employee participation in health savings accounts. Health savings accounts (HSAs) are experiencing an evolution. HSA technology is now engaging participants and improving their understanding of their HSAs. In addition, there may be more HSA technology solutions soon available. Growing numbers of recordkeepers are beginning to offer health savings accounts to their defined contribution (DC) plan clients.
Just as 401(k) assets grew from $1.7 trillion in 2000 to $5.2 trillion at the end of 2018, HSAs are experiencing a growth in assets, albeit on a smaller scale. According to a recent article from 401kspecialist, total HSA assets came in at $53.8 billion at year-end 2018. However, HSA asset growth has soared from $1.7 billion in 2006 to $53.8 billion at year-end 2018. With the assistance of HSA technology, participation in these plans is also on the rise.
The HSA growth spurt may be due in part to the fact that machine learning (ML) and artificial intelligence (AI) are now being used to entice participants to use HSAs more holistically. See www.401kTV.com. The HSA technology is being used to help participants better understand the tax benefits of HSAs, convincing them to increase their contributions, as well as to use their HSA as an investment tool, not just a tax-deferred savings account for medical expenses.
A boon for employers, according to 401kSpecialist, is that the technology does all the heavy lifting while they reap the benefits of steadily increasing employee contributions to the HSA plan. HSA technology can also help increase the appeal of lower-premium, high-deductible health plans (HDHPs) for employees. The goal is to help employees recognize that they’re being offered an attractive benefit while also lowering healthcare insurance costs for employers. HSA technology offers long-term value for employers and employees, according to 401kSpecialist. Advisors who recommend HSAs and the technology also stand to benefit by bringing additional value to their employer clients.
Some of the benefits of HSA technology include:
HSAs are becoming more automated and painless for participants: Beyond automatic payroll deductions, HSA technology also offers employees the opportunity to link their health savings account to their checking, savings, credit card, and health plan. It can also recommend contribution amounts.
Employers can get a better understanding of participant behaviors: The Machine Learning (ML) and Artificial Intelligence (AI) learning built into HSA technology draw on behavioral economics, which is the science behind human behavior with regard to our finances. Like automatic enrollment and auto escalation built into 401(k) plan design helped employees overcome inertia around saving for retirement, so HSA technology can help “nudge” participants toward positive decisions, such as increasing their contributions. In addition, participants may be offered highly personalized financial guidance to help them understand that they can afford to fund their HSA and that it can have a positive impact on their long-term financial wellbeing.
They create a positive feedback loop: A positive action, say, funding an HSA, triggers the technology to provide the HSA participant with positive feedback and encouragement, which perpetuates the behavior and, in theory, drives lasting change. In addition, the technology may prompt participants to better understand the great “triple tax benefits” of HSAs — pre-tax contributions, tax-free earnings and interest, and tax-free withdrawals for qualified medical expenses. In addition, as HSA participants adapt to the accounts as investment tools, the technology may continue to incentivize them as they watch their savings grow over time, according to 401kspecialist.
Plan sponsors now have more HSA solutions to choose from as well. According to a recent article in Pensions & Investments, recordkeepers are jumping into the HSA fray. Many are grappling to get a piece of the HSA pie in the marketplace, including Nationwide Mutual Insurance Co., Voya Financial, Massachusetts Mutual Life Insurance, and Empower Retirement. All have said that they plan to offer HSA plans to their defined contribution (DC) plan clients.
Recordkeepers are embracing financial wellness and recognizing that HSAs are a vital part of a holistic approach to fostering financial wellbeing for American workers. Some recordkeepers, knowing what they don’t know, have signed on with third-party HSA providers to help them offer effective HSA solutions for their clients.
Recordkeepers have taken some time to enter the HSA space because they have been assessing the needs of plan sponsors and participants. They are figuring out ways to best help their clients achieve their goals vis a vis HSAs and financial wellness. As more employers adopt high deductible health plans to lower healthcare costs both for themselves and their employees, they are very much demand in the marketplace for HSA solutions. Moreover, it seems technology can help to further drive the success of HSAs in the workplace by enticing higher participation and contribution rates.
One thing is for certain: the HSA technology might be an idea whose time has finally come, with a little help from artificial intelligence. (See 401ktv.com for the upcoming GENIE Awards.) Both employees and employers stand to benefit from a tech-driven HSA and the slew of new providers who have recently entered into the HSA space.