Pub. 7 2017-2018 Issue 6

14 O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S - H E L P I N G C O L O R A D A N S R E A L I Z E D R E A M S L ike many Americans, Gavin Smith’s employ- er is of fering only a high deductible health plan (HDHP) next year. Having two active sons and knowing the HDHP has higher out-of- pocket amounts, he is worried about having enough money to pay the medical bills. Gavin decides to reduce the amount he saves for retirement to help free up more money for health care costs. A recent survey by Em- ployee Benefits Research In - stitute (EBRI)/Greenwald & Associates shows that Gavin is not the only worker making a choice like this. Some workers are sacrificing their retire- ment security to meet their potential medical expense obligations. Unfortunately, this only shifts the financial burden from health care to retirement readiness. While HDHP enrollment continues to grow, some work- ers and employers may not realize how health savings accounts—a component of HDHPs—can reduce their financial concern. Workers save money using tax-free HSA distributions for qualified medical expenses. And simi- lar to retirement plans, many employers help fund their workers’ HSAs to encourage HDHP enrollment, which is a cost savings for employers and workers alike. Worker Dissatisfaction The Employee Benefits Re - search Institute (EBRI)/Gre- enwald & Associates recently released the 2016 Health and Voluntary Workplace Benefits Survey (WBS), which shows that some workers are sacri- ficing their retirement security in response to rising health care costs. The survey includ- ed 1,500 workers between ages 21–64. The results show, among other things, that some workers are reducing their retirement plan contributions, taking loans and withdrawals from their retirement savings, or delaying retirement. • 28 percent of workers who reported an in- crease in health plan costs decreased their retirement plan con- tributions, and 48 per- cent have decreased their contributions to other savings. • 12 percent took a loan or withdrawal from their retirement plan. • 30 percent have de- layed retirement as a result of rising health care costs. Another survey, the 2017 Workplace Benefits Report by Bank of AmericaMerrill Lynch, also indicates that health care costs negatively affect financial wellness. This survey included a national sampling of 1,242 employees across the U.S. whose employers offer 401(k) plans. Survey results show that 79 percent experienced an increase in health care costs in 2016 (up from 69 percent in 2015). Among those experienc - FEATURE ARTICLE CHRISTLE JOHNSON, SENIOR EDITOR, ASCENSUS The results show, among other things, that some workers are reducing their retirement plan contributions, taking loans and withdrawals from their retirement savings, or delaying retirement. Surveys Show Rising Health Care Costs Affect Retirement Savings— HSAs Are a Solution