Three quarters of sponsors require a minimum balance of at least $1,000 to invest assets beyond money market funds or cash.(Photo: Shutterstock)

Employees still don't really get the potential of health savings accounts as a retirement planning tool, and 60 percent of plan sponsors say that employee education is a dominant concern.

That's according to Plan Sponsor Council of America's inaugural survey on HSA plan design and use, which finds that while assets in HSAs are quickly increasing, workers still don't understand how they can use those accounts to save for retirement.

While 56.6 percent of sponsors rely on “how-to” guides and 59.9 percent use group presentations to school employees on the ins and outs of HSAs, only one out of five sponsors offer multiple education outreaches multiple times a year. Instead, 76.4 percent say their HSA education is offered during open enrollment.

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While 38.2 percent of organizations have offered an HSA to employees for 2 to 5 years, only 34.4 percent have done so for 6 to 10 years. And just 25 percent nudge employees who don't contribute to the HSA, or only contribute a nominal amount, with additional education.

But less than 10 percent of sponsors go the extra mile to use or suggest a default HSA savings rate to employees, and just 30 percent automatically enroll employees in the HSA if they enroll in the HSA-qualifying health option.

Still, the average participant contribution in 2018 was $2,595, with the average account balance at the end of 2018 amounting to $5,239. And more than half of respondents educate employees on choosing between contributing to the 401(k)/403(b) plan and contributing to the HSA.

In addition, more than half (54.7 percent) of organizations pay the HSA maintenance fees for active employees, although at 35.9 percent of organizations the employee is responsible for the fees.

And while the vast majority of responding organizations (85.6 percent) offer investment options for HSA contributions, that doesn't mean that all employees have equal access to those investment options – three quarters of sponsors require a minimum balance of at least $1,000 to invest assets beyond money market funds or cash.

Even if they want employees to take advantage of the retirement savings feature of HSAs, plan sponsors don't necessarily know exactly what employees are doing with their HSA assets.

While nearly 30 percent of sponsors say that less than a quarter of employees spent their HSAs down to zero in 2018, 63.1 percent aren't sure how employees are using the money.

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