Having An HSA Option For Employees Drives More 401(k) Savings
You might think contributing to an HSA would lead to smaller contributions to other savings accounts, but a recent Alight study found that isn’t the case. After analyzing over a million employees, they found that people who contributed to both HSAs and 401(k)s put more into their 401(k)s than people who only contributed to their 401(k)s.
The study found that, for people in HSA-eligible health plans, the ones who contributed to both HSAs and 401(k)s put an average of 2.9% of their pay in their HSAs and 8.9% in their 401(k)s (a total of 11.8%). However, people who just contributed to their 401(k)s only put 6.8% of their pay in their accounts. This trend of higher 401(k) contributions for employees with HSA and 401(k) options held steady across different pay ranges.
Perhaps the people who contributed to both their HSAs and 401(k)s better understand the value of a comprehensive retirement strategy that includes investing HSAs funds to pay for retirement medical expenses tax-free. In any case, having an HSA option and communicating its value as an investment vehicle may help boost employees’ overall savings.
If you’d like to know more about an HSA solution for your company, we can help. Learn about enrolling your group here.