All Things HSA: A Conversation With Roy Ramthun (Mr. HSA)
All Things HSA: A Conversation With Roy Ramthun (Mr. HSA)
Recently, the HealthSavings team sat down with Mr. HSA himself, Roy Ramthun, to hear his thoughts about how he’d like to expand HSA usage, how to increase buy-in for investing HSA funds, and how employers can better communicate with their employees about HSAs. Here are a few highlights from the conversation.
Expanding Access To HSA-Qualified Plans
Ramthun noted how current IRS restrictions for HSA-qualified plans (HSAQPs) can be unclear, with details like prescription drug coverage often determining whether health plans are HSA-qualified. He proposed a simpler standard for HSAQPs based on plans’ actuarial value, or the percentage of total average costs a plan will cover. Under his proposal, any health plan with an actuarial value below 80% would be HSA-qualified, even if potential accountholders also had FSAs.
“If you’ve got enough skin in the game through your health plan, we don’t [need to] care exactly about what the deductible or out-of-pocket maximum is. Let’s just make it easy and have the health plan figure out what their actuarial value is. If it’s below 80% it’s a HSA-qualified plan, that’s all you need to know! Just tell your customers that, and boom, they can have a HSA.”
Although one of the requirements for HSA-qualified plans is a minimum annual deductible of $1,400 for people with self-only health coverage or $2,800 for people with family coverage, not all high deductible health plans (HDHPs) are HSA-qualified. Ramthun brought up data from the National Center for Health Statistics showing that only about 40% of the 45 million people enrolled in HDHPs are enrolled in HSA-qualified plans. Under his proposal, the other 60% of people enrolled in HDHPs could become HSA-eligible, significantly expanding the HSA market.
“We double the size of the market, and I think employers will move more of their coverage in that direction, because it’s simple and easy. They don’t have to worry about some of their employees not taking their chronic disease medications anymore, because those can be covered first-dollar if [the plan] meets the other overall actuarial value requirements.”
Ramthun also mentioned how he’d like to see HSA contribution limits expanded and how he’d love for people to be able to cover all their out-of-pocket medical costs with HSA funds.
The criticism I always hear is, ‘Oh, that that’s just going to benefit wealthy people,’” Ramthun said. “Well, what about the really sick people who have $15,000 of out-of-pocket costs … If I’m chronically ill, and I have these expenses every year, I can’t put enough money away fast enough. I’m spending $15,000, guys. Give me a break to help me pay for those expenses.”
“[If people] are incurring the cost, if they’re paying the doctor or the hospital something, why not run that through the HSA, and get the tax break that comes with it? It’s like a 20% – 40% rebate on all of the expenses that you’re incurring.”
Better Communicating HSAs’ Value To Employees
For employers, Ramthun focused on the importance of ongoing communication about HSAs, rather than just talking about them during open enrollment.
“We tend to have this discussion once a year around open enrollment … but people are consuming healthcare throughout the year. So, we’re leaving them unaided with all kinds of helpful information, and we think that it’s somebody else’s job to provide the information to them. This has got to be an ongoing conversation … Have you thought about different investment options? Did you know you can even invest your HSA like you can your 401(k)? It’s very basic stuff, but I just don’t think we do it enough.”
In addition to keeping the HSA conversation going year-round, Ramthun also emphasized the importance of employers making sure their employees know where to go with HSA-related questions.
“Where can [employees] go if they’re not sure? Where can they get advice? Do you want them to go to HR? It’s an option. Does HR feel empowered to give that kind of advice? If not, then who else can they go to? Who is a trusted source for other options?”
Finally, Ramthun stressed the need for individuals to better understand how the healthcare system works and what costs they might be liable for. He brought up how people price-shop and know how much they’ll be spending for expenses in every industry except healthcare.
“I just see so many people going to the closest thing,” he said. “‘I’m going to have my surgery at the closest hospital.’ Are they any good? Have you asked? Who’s the surgeon? ‘I don’t know.’ How many of these procedures has the surgeon done? ‘I don’t know.’ How many successes have they had? ‘I don’t know’ … there’s a lot about healthcare that consumers just don’t understand, and need to understand.”
Increasing Buy-In For Investing HSA Funds
Ramthun noted how many people still confuse HSAs with FSAs, which have use-it-or-lose-it limits. This misunderstanding keeps people from putting funds into their HSAs to grow over time. Ramthun also highlighted how HSA providers should emphasize the importance of investing HSA funds, rather than just using them for current medical expenses.
“I think people are finally starting to understand the long-term benefits of a HSA, in the retirement and investment space,” Ramthun said. “So, that’s the place I’m trying to light as many fires as possible. But people’s out-of-pocket costs are much higher than they ever used to be … They’re throwing out figures for a couple retiring this year of $280,000 in out-of-pocket expenses for the rest of your lifetime. Now if you want to pay that with your retirement plan, jack that up by another 25%, because that’s what you’d have to pay with post-tax dollars … Think of [your HSA] more like your retirement plan, and put the money aside for the future.”
With investment HSAs, individuals can pull out tax-free funds to pay for qualified medical expenses in retirement and keep their 401(k) dollars for non-medical costs. Ramthun also brought up research from Fidelity and Alight that suggests that people with both HSAs and 401(k)s actually contribute more to their 401(k)s than people who only have 401(k)s. He encouraged HSA providers to champion this research as proof that HSAs can be a viable retirement vehicle without cutting into 401(k) contributions.
Whether they’re used to pay for current medical expenses or invested to cover healthcare costs in retirement, HSAs are a powerful piece of any comprehensive financial strategy. Find out if you’re eligible for an account or start the enrollment process here.