亚洲色吧

Paying for healthcare, and paying for retirement are the two issues that are for your employees. Despite the emphasis on financial wellness, say financial stress has caused them to either miss work or has negatively affected their productivity. In any case it鈥檚 common sense that the more employees are worried about their own bottom line, the less they are focused on what they can do for yours. 

What鈥檚 missing from your ? It might be something you already offer: . Because they鈥檙e often communicated during open enrollment with flexible spending accounts (FSAs) and other health benefits, an HSA鈥檚 true intent as a 鈥渟avings鈥� account gets overlooked. Watch our latest episode of Benefits to learn more about the value of positioning HSAs as part of a financial wellness strategy. And keep reading to see how HSAs have perks that a 401(k) and IRA don鈥檛 have. 

What employers and employees are saying

The Employee Benefit Research Institute (EBRI) recently conducted , which confirmed that 鈥渢he top issues addressed through financial wellness initiatives were healthcare costs and retirement preparedness.鈥� 

Participants echoed these sentiments in the consumer healthcare report we released in 2019. In that report, nearly twice as many employees said they were stressed about their finances than were stressed about their jobs. 

On top of that, the expected healthcare costs in retirement continue to rise. The average, healthy 65-year-old couple is projected to need in today鈥檚 dollars to cover their healthcare costs. A 401(k) can help with these retirement costs, but withdrawals from a 401(k) are subject to income tax.

How HSAs rival a 401(k) or IRA

The 鈥渟avings鈥� is a key point of emphasis in 鈥渉ealth savings accounts.鈥� Yes, participants can save money on short-term needs. But they can also build a balance for future needs, and they can even invest their HSA funds. Plus, the purchasing and tax-advantaged power of an HSA is, in many ways, better than what they鈥檒l experience with when they reach retirement. 

There are a couple important distinctions when comparing an HSA with a 401(k) and IRA: 

Contributions and withdrawals

• With an HSA, contributions and withdrawals are tax-free (as long as they purchase eligible expenses). 
• With a 401(k), contributions are tax-free, but withdrawals are taxed as any other type of income. Additionally, if they withdraw funds before they turn 59 陆, they are subject to a 10 percent early withdrawal penalty. 
• With an IRA, there are tax implications for one or the other (depending on the type of IRA). If an employee experiences an unexpected healthcare expense, they have flexibility to use HSA funds that they don鈥檛 have (from a tax perspective) with a 401(k) or IRA.

Surprise healthcare costs

• HSA participants who are using the account for retirement planning can tap into funds at any time should a need arise. They are only subject withdrawal penalties if the funds are spent on ineligible expenses. 
• With a 401(k) or IRA, withdrawals prior to age 59 陆 are generally subject to be included in the accountholder鈥檚 gross income, plus are subject to a 10 percent penalty. 

鈥淗SAs are the one benefit that can check both the healthcare and retirement-planning boxes,鈥� said Jeff Bakke, who is chief strategy officer for 亚洲色吧鈥檚 health division. 鈥淭hat鈥檚 why these accounts should be the cornerstone of your employee wellness program.鈥�

See the HSA savings

Over half of HSA-enrolled employees also contribute to a 401(k). But there鈥檚 a reason why these employees should consider before they contribute to a 401(k) or IRA. 

Let鈥檚 lay out a scenario for someone, who we鈥檒l call Jane Smith. Jane is married with two kids and is preparing for retirement by participating in an HSA, 401(k), and IRA. 

• She and her employer contribute $4,000 apiece into each of these accounts: her family HSA, 401(k), and IRA. 
• She invests his HSA funds. The return-on-investment for each account is 5 percent annually.
• Her combined federal and state tax rate is 25 percent, and her tax rate at the time she distributes funds is 15 percent. 

Watch her funds grow: 

That鈥檚 a 31 percent increase in healthcare purchasing power with an HSA after 20 years when compared to a 401(k) or IRA! So what happened?

• 401(k) and IRA contributions are subject to FICA taxes (which are 7.65 percent), while HSA contributions are not. 
• With a 401(k) or IRA, funds are taxed somewhere, either when they鈥檙e contributed or when they鈥檙e withdrawn. With an HSA, funds are not taxed when contributed or withdrawn, as long as the purchases are for eligible healthcare expenses. 

鈥淏ecause of the triple-tax advantage nature of an HSA, employees actually make more money than with a 401(k) or IRA,鈥� Bakke said. 鈥淭here are other variables, such as employer matching of HSA or 401(k) funds that employees need to consider. But all things being equal, they鈥檙e actually better off putting money in HSA.鈥�

Next steps 

Can you do more? Or, can you do 鈥淢ORE鈥�? Yeah, there鈥檚 an acronym for just about everything. But maybe this mnemonic device will help you remember a few things you can do to boost HSA participation. 

• Match your employees鈥� HSA contributions
• Offer an HSA-eligible high-deductible health plan
• Re-position your HSA messaging during open enrollment so employees view HSAs as a healthcare and retirement-planning account.
• Educate your employees about their savings and investment potential.

Would you like to learn more about HSAs and retirement planning? Get your free white paper.