Do employers really know best?
Despite the low usage and “perceived value” by employees, many industries continues to push forward with new HSA-based plans. But could the current move to Health Spending Account-based plans be the same as the move to defined contribution (DC) pension plans in the 1990s?
At that time, defined benefit (DB) plans were seen as poorly designed for the modern mobile workforce, and an “employer knows best” approach that was condescending to employees. Employers wanted to rid themselves of funding uncertainty, and employees were happy to get lump sum contributions that they could “invest for success” and carry with them to their next job.
LEarning from the past
Fast forward 20 years and the guaranteed lifetime income that DB plans deliver is the gold standard for retirement financial health, and the complexity of saving enough and investing well in the DC plan environment has created enormous challenges, so much so that the DC retirement industry is pursuing target benefit plan arrangements that focus on both investment returns and income delivery.
Are HSAs Reaching a Tipping Point?
With the actual usage and perceived value of the HSA so low, are we reaching a similar tipping point on the benefits side? Could it be that HSAs—while offering great flexibility—simply don’t offer enough solid, guaranteed coverage?
With current employees expressing a desire for wellness benefits such as gym memberships (51%), personal financial planning (27%), subsidized healthy food (25%) and onsite health assessments (20%), employers have room to be more directive in terms of where they allocate their benefit dollars.
The Desire for Directed Wellness Benefits
Employers with an HSA might consider channeling those HSA dollars into more directed wellness benefits that could improve the life and health of employees. Which begs the broader question: with seemingly modest value and low usage stats, is it time to rethink the role that HSAs play in benefit plan design? For employers, that question is well worth considering.
Employers with an HSA might consider channeling those HSA dollars into more directed wellness benefits that could improve the life and health of employees.