stylized faux HSA card green colored with bandaid on it

One incentive for enrolling in a high-deductible health plan is the ability to contribute to a Health Savings Account (HSA), which is often seen as a way to offset the higher out-of-pocket expenses that come with the plan. An HSA can be a valuable savings tool for employees enrolled in this option, but it can also have even more potential value as a retirement savings vehicle.

However, although HSAs provide a variety of benefits for employees, they are in need of more education on how best to utilize this tool for long-term savings. That's according to a whitepaper detailing results from a survey by Optum Bank and Empower Retirement.

The survey, which consisted of online responses from 931 commercial consumer panelists, showed that there is a significant knowledge gap on just how an HSA can work for the participant.

One of the main issues around this gap, per the study, is the employee's lack of budgeting or understanding of how much health care will cost once they retire.

In fact, the survey showed that more than a third of the respondents were "not very or not at all aware" of how much money they will need for health care in retirement, and less than a quarter have separate funds set aside for those expenses.

Contributing to this gap is that nearly 25% said they are not seeking out that knowledge. In other words, "they don't know what they don't know," said the report.

Another disconnect and opportunity for education, according to the study, is around HSA contributions and investing.

Per the study, even among respondents who understand that HSA contributions can be invested in mutual funds or other investments, fewer than half have considered doing so.

And just one-quarter of those who understand HSAs have considered using one as part of their retirement plan.

One reason plan participants may not think about investing is, according the survey, consumers often use their HSA funds to pay for current medical expenses and in turn miss out on compound growth potential. But per the survey, consumers don't always understand the dynamics.

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Employees don't know HSAs might also be used for retirement saving

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