Hoosier Banker 31 stantial retirement savings is critical. They’ll also start thinking of where to place their payroll deferrals, which could create a possible competition between retirement plan deferrals and HSA deferrals. “Where should I invest my money?” is a question that more employees will be asking of their employers and advisers. Consumer Habits A study conducted by Alegeus3 outlined that what consumers believe and what they do can be vastly different when it comes to understanding how to cover expenses for current and future healthcare needs. According to Alegeus’ research, 51 percent of the respondents fear unexpected healthcare expenses near-term. In addition, 68 percent believe themselves to be in the saver category (described earlier), where they focus on carrying forward HSA assets year after year. The reality is that only 23 percent of consumers save anything beyond the current year, and more than 50 percent underfund their healthcare savings. What is perhaps the most disheartening statistic from the Alegeus survey is that 70 percent of the participants could not pass a basic HSA knowledge test. The New Challenge Those of us who assist employers and their employees through retirement and health care planning are facing a new challenge. An article published by the Journal of Financial Planning4 indicates that most employees are better off deferring to their HSA first in order to cover the current year’s potential expenses. Employees should then begin deferring in their 401(k) plan and work toward maximizing the employer match. The study emphasizes that deferred dollars used for qualified medical expenses are tax-exempt and can provide an immediate benefit if needed. After the employer match is achieved, then employees should begin planning where the next dollars deferred are best served. Remaining Competitive Whether you work in a bank serving local employers or employees, or you’re an adviser seeking to strengthen your role with an employer, it is critical to understand that the environment is requiring a stronger knowledge of the role in health care – both near- and long-term – when employees are seeking answers on where to place those precious deferral dollars. You and your teams will need to understand this new balance in order to remain competitive. HB 1 Devenir Research – “2017 Year-End HSA Market Statistics & Trends,” Feb, 22, 2018. www.devenir.com/wp-content/ uploads/2017-Year-End-Devenir-HSA-Market-Research-Report-Executive-Summary.pdf 2 ConnectYourCare – “2018 Trends Report Reveals HSA, FSA, and HRA analytics,” Feb. 20, 2018. www.connectyourcare.com/news-post/employees-concern-covering-health-care-costs-retirement-intensifying/ 3 2017 Alegeus Healthcare; State of Denial https://www. alegeus.com/insights/research-reports/2017-alegeusstate-of-denial-research-report 4 Greg Geisler, “Could a Health Savings Account Be Better than an Employer-Matched 401(k)?” Journal of Financial Planning, www.onefpa.org/journal/Pages/JAN16-Coulda-Health-Savings-Account-Be-Better-than-an-EmployerMatched-401%28k%29.aspx Providing Creative Financing Solutions to Support Community Development Since 1993 We have an unwavering belief that all people deserve the opportunities provided by living in healthy communities. • $7 B in Community Impact • $3.7 B in Total Investments • 65,000 Jobs Created • 101,000 Homes Created for Families in Need By working closely with investors, developers and local stakeholders, we bring the expertise, capital and resources to markets in need and improve lives. advancing community cinnaire.com 844-4CINNAIRE
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