Companies need help evenchoosing an HSA — one employer, when asked how it picked its HSA,said they selected it because it was across the street and theythought it would be easier for employees to make deposits. (Photo:Shutterstock)

NASHVILLE – Retirement advisors might be wondering – why getinto health savings accounts? Aren't HSAs the purview of benefitsbrokers?

Not anymore, said a panel of industry experts at  the2018 NAPA 401(k) Summit in Nashville.

HSAs have an investment capability that's right in the advisor'swheelhouse – after all, who should be talking about assetallocations in an HSA? Not a benefits broker.

And advisors are used to educating not only employees, butemployers. Apparently it's needed, based on the panel's stories.Companies need help even choosing an HSA — one employer, when askedhow it picked its HSA, said they selected it because it was acrossthe street and they thought it would be easier for employees tomake deposits.

Advisors might also find HSAs worth investigating due to thefollowing:

• HSAs are triple-tax-free vehicles for employees –tax-deductible contributions, tax-free earnings, and tax-freedistributions.
• Enrolling somebody in a 401(k) is an opportunity for a one-timeconversation– but if you enroll them in an HSA, you see them everyyear at enrollment time.
•  HSAs provide the opportunity to offer another serviceto employers while also adding assets under management.

Why now?

The HSA conversation is changing. Advisors are changing. “Twoyears ago the conversation was 'what is an HSA?' Now we know and weknow the impact on employees and their retirement prospects,” panelmoderator Ryan Tiernan, National Accounts Manager, American Fundsfrom Capital Group said.

In the past, implementing an HSA for an employer meant simplyticking the boxes. Now it's an educational process, helping to showhow HSAs work and why they're important. “Employers are pleasantlysurprised I have the knowledge. They want to talk about it,” JamieGreenleaf, General Partner/Principal at Cafaro Greenleaf said.

Where health insurance and retirement plans were siloed in thepast, HSAs are the link between health care and finance. “Thefuture of this is looking at annual benefits enrollment as not ahealth care decision but a financial decision,” Ken Forsythe,Empower's Assistant VP, Product Strategy said.

Investments in HSAs

Not only do workers mix-up flexible savings accounts''use-it-or-lose-it' aspect with HSAs, but, Forsythe said, Empowerfound only 22 percent of employees realized HSAs are tax free.

So it's not surprising that many workers also don't understandthe opportunity HSAs offer in regards to investing. “Only 18percent of assets in HSAs are currently invested,” Tiernansaid.

“The investment lineup is evolving,” Greenleaf said. “We'redoing a disservice by mirroring the 401(k). The policy you put inplace for investments in HSAs has to be based on employeedemographics, their health, where they are in life.”

Helping employees

Employees might be helped by looking at a broader spectrum ofwhere they should be putting savings, Forsythe said. “There's thisnotion that I can only put x number of dollars in my HSA, and I'mgoing to end up using it all. The point is that those sameindividuals could be potentially saving too much in their 401k —they could be allocating it to the HSA to have a more tax-efficientoutcome.”

But on the other hand, he said, “If something happens and theydon't have the money set aside for that in the HSA because it's allin investments, we could put them in the position of having to sellat a loss. The HSA structure needs to facilitate a self-insurancemodel — the individual must maintain a certain amount of money incash, so it's ready for them to use, then put the rest ininvestments.”

Making the case to employers

With established clients, panelists said it was helpful toconnect HSAs to helping employees be better prepared forretirement. For new clients, you show a more holistic benefit.“We're not just going in and saying 'I can save money on your401(k)' — we're going in and saying 'I can save on your bottomline,'” Tom McKenna, Director of Institutional Sales at Health ViewServices said.

The panelists offered this advice:

• Look to leverage your vetted expertise: Take what you're goodat and move it to an area you're not focusing on. You do investoreducation, you can do HSA education.
•  Collect success stories: As you compile successstories, you can demonstrate how valuable a DC advisor can be tothis equation.
• Don't sell yourself short: “What we do is valuable,” Greenleafsaid. “It's not just investment, it's plan design, it's how youeducate employees. Employers aren't afraid to pay for a servicethat's of value.”