Devenir HSA Newsletter: September 2023

  • September 1, 2023

Subscribe to Devenir’s monthly newsletter and stay up to date with the latest HSA news! Each month Devenir highlights a selection of articles to keep you in the know of the latest trends and developments in the HSA marketplace.

A summary of the articles included in the September 2023 edition:

  • EBRI Finds Increased Use of Certain Medical Services Covered by HSA-Eligible Plans
  • InComm Payments Acquires Zenda, Developer of AI-Powered HSA and FSA Solutions for Employee Benefit Programs
  • HSAs Through a Gender Lens
  • Can My HSA Take the Place of an IRA?
  • HSAs: The Ultimate 401(k) Supplement
  • How I Invest My Health Savings Account

EBRI Finds Increased Use of Certain Medical Services Covered by HSA-Eligible Plans

There has been an increase in the use of three of seven medical services and prescription medications by enrollees in HSA-eligible plans, compared with usage by enrollees in non-HSA-eligible plans, according to new research from the Employee Benefit Research Institute.

An IRS notice published in 2019 allowed HSA-eligible health plans—also called high-deductible health plans—to cover 14 medications and other health services used to prevent the “exacerbation of chronic conditions prior to meeting the plan deductible,” according to EBRI.

This allowed HSA-eligible health plans to adopt a more flexible benefit design, offering more protection for certain medical services through a “value-based” insurance-design plan structure.

InComm Payments Acquires Zenda, Developer of AI-Powered HSA and FSA Solutions for Employee Benefit Programs

InComm Payments announced its acquisition of Zenda, a developer of employee health and benefits solutions known for its innovative HSA and FSA platform. Strengthening InComm Payments’ position as a leader in the healthcare payments industry, the acquisition marks the company’s first expansion into the employer health benefits category with unique HSA and FSA solutions that leverage AI to automate IRS rules and streamline account management.

HSAs Through a Gender Lens

Bank of America recently conducted a new HSA gender lens study to aid in understanding potential gender differences in the financial behavior and actions of plan participants.

Key highlights of the study were:

  • HSA utilization rates are comparable for women and men
  • Contribution rates are comparable as well, although the dollar amount of contributions is lower for women than for men
  • Very few participants make maximum contributions (similar for women and men)
  • Women are taking withdrawals more than men; as a result, men are more “savers” than “spenders” with the accounts
  • Men have higher HSA balances than women

Can My HSA Take the Place of an IRA?

HSAs have been growing more and more popular. As of late 2022, almost 72 million people had an HSA, compared to 67 million in 2021 (according to Devenir).

Now, the nice thing about having an HSA is that you can set aside money for healthcare expenses on a pre-tax basis. In other words, if you put $1,000 into an HSA, you won’t pay taxes on that portion of your income.

HSAs then allow you to use your money whenever you want. Unlike FSAs, they don’t force you to deplete your plan balance year after year. Quite the contrary — HSAs allow you to invest money you don’t need right away to grow your balance into a larger sum. In fact, a good strategy is to save in an HSA during your working years, invest that money, and kick off retirement with a large sum earmarked for healthcare expenses.

HSAs: The Ultimate 401(k) Supplement

Health issues can arise at any time. And during retirement, many may turn to their 401(k) for the funds to address them—but HSAs are another option, and a July 27 webinar took a look.

HSAs are a savings vehicle that can supplement a retirement plan, observed Sara Caddy. She added that 401(k)s are a great savings vehicle, but HSAs are ideal for health care expenses in retirement. And part of the reason for that, she said, is the triple tax advantage that HSAs offer, which gives them an advantage over 401(k)s—whose distributions are taxed—for use in paying for health care.

And since an HSA can be drawn upon to help cover health-related expenses during retirement, said, Tara Kahler, “it is considered a retirement vehicle.” In addition, she suggested that HSAs can help preserve balances in other retirement accounts, remarking that HSAs help reduce the number of hardship withdrawals that might otherwise be taken from a 401(k) or other account if an emergency occurs.

Kahler and Caddy offered some ideas on strategies by which HSAs and 401(k)s can be coordinated.

How I Invest My Health Savings Account

When Morningstar introduced a HDHP with a HSA alongside the traditional healthcare plan about a decade ago, some of my colleagues were skeptical. Even though the company provided generous incentives for selecting the high-deductible healthcare plan, they worried about shouldering the higher out-of-pocket costs that are part and parcel of high-deductible healthcare coverage. Heck, “high deductible” is right in the name!

But I was all over the high-deductible healthcare plan from day one, not so much because I prefer that type of coverage but because I was excited about the opportunity to invest in an HSA. I was ready to have an additional receptacle—along with our IRAs and 401(k)s—for long-term tax-sheltered retirement savings. My only reservation, if you can call it that, was whether my HSA assets would ever add up to much. While the contribution limits have edged up a bit over the past several years, they’re still less than $8,000 a year for people with family coverage, like me, and half that much for singles.

Nearly a decade later, I’m happy to report that my enthusiasm for the HSA as an investing vehicle was warranted: My assets in it have quietly and painlessly compounded thanks to the genius of automatic payroll deductions and investment compounding.

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