Adding HSA to Your 401(k) Advisory Practice - David Ritchie - Ryan Tiernan

B P A S P A R T N E R C O N F E R E N C E 2 0 1 6

Adding HSA to Your 401(k) Advisory PracticeRyan Tiernen

VP, BPAS VEBA & HRA/HSA Services


David RitchieSenior HSA Consultant, Access Point HSA

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What is an HSA?• A tax-advantaged account for the purpose of paying for eligible medical

expenses• Not employment based• Allows contributions by the employer and employee• Annual contribution limits

– 2016: $3,350 individual - $6,750 family• Available only to individuals with qualifying High Deductible Health Plan

(HDHP) coverage• Not available to those receiving benefits under Medicare

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What is a High Deductible Health Plan (HDHP)?

• Minimum annual HDHP deductible:– 2016: $1,300 individual – $2,600 family

• Annual HDHP out-of-pocket maximum:– 2016: $6,550 individual – $13,100 family

• Cannot provide first-dollar coverage, with certain exceptions – preventive care, dental, vision, limited-use FSA

HSA Trends - Demographics

• 49% of all individual HSA/HDHP enrollees were age 40 or over; 51% were under age 40

• On average, HSA account balances have grown 31% each year • Average yearly administration fee for HSA investment programs is $32 • Average employer contributions to HSAs are $886 for single coverage;

$1,559 for family coverage • Average HSA accountholder saves approximately $500 in taxes annually • Nearly 25% of continuously contributing HSA account holders save most

of their contributions, which will help pay for escalating health care costs in retirement

2016 Health Savings Accounts

MinimumDeductible

Maximum Out-of-Pocket

ContributionLimit

55+ Contribution

SINGLE $1,300 $6,550 $3,350 $1,000

FAMILY $2,600 $13,100 $6,750 $1,000

Contribution Limits, Deductibles and Out-of-Pocket Expenses

HSA Product Characteristics

• Must be paired with a qualified high deductible health plan (HDHP)

• May pair with Limited Purpose FSA and/or HRA

• Vision, dental expenses only

• Employer and/or consumer may contribute to account

• Contributions made by payroll deduction, check, transfer

• IRS restrictions on annual contribution amount

•No third party substantiation required – consumer responsible • Internal Revenue

Code §213(d) expenses may be reimbursed • Funds may be

withdrawn for non-qualified expenses with penalty

• Funds may carry over year to year

• Funds are portable• Funds may be

invested and earn interest for greater savings potential

Consumer Owned Contributions Distributions Account

Balance

2016 BPAS Partner Conference

CDH Plan Comparisons

1. SHRM 11/15 – Show me the Benefits

36%

2015

33%

2014

26%

2013

Employer difficulty recruiting employees at all levels:

66%

Healthcare

59%

Retirement

53%

Financial

52%

Flex Time

Most important benefits for attracting talent:

The Growing Value of Benefits

For Investment & HR Professional Use OnlyCopyright © 2016 Access Point HSA LLC. All Rights Reserved.

Defined Benefit Health Care

• Traditional Health Insurance (HMO)

• Employer Selects Coverage Options

• Growth of the FSA Flexible Spending Account

Consumer Driven Health Care

• Cost shift to employees via design & incentives

• Employees limited choice coverage options

• FSA,HRA & HSA

Defined Contribution Health Care

• Employer makes a fixed contribution

• Employee now has increased choice in coverage and responsibility for care

• FSA, HRA & HSA

Progression of Consumer Responsibility


Source of Funds401k/403b

Contributions Only 401k & HSA Combination

Salary $65,000 $65,000

10% Employee Savings $6,500 $6,500

Employee 401k Contribution $6,500 $3,500

Employer 401k Match $1,800 $1,800

Employee HSA Contribution $0 $3,000

Employer HSA Contributions $0 $1000

Total with Average Employer HSA Contribution

$8,300 $9,300

A New Contribution Model?


HSA at 25% tax bracket: $245,000

401k at a 25% tax

bracket = $327,000

What will the 401k balance

have to be?

65 year old couple will need

$245,000 to cover out of

pocket healthcare expenses.

$82,000Savings of

Distribution Efficiency


Long Term Mindset

Investment Oversight

Higher Contribution Limits

Lower Age Access to non HC Dollars

Triple Tax Free HC Expenses

Penalty free at age 65

No RMDs

No Income Limits

401(k) in Concert with HSA

For Investment & HR Professional Use Only. Copyright © 2016 Access Point HSA LLC. All Rights Reserved.

Investment Capabilities

Employer & Employee Support

Can these be quantified &

benchmarked?

Custodial Strength

Experience

HSA Provider Attributes

• TOTAL RETIREMENT SPECIALIST

Increase Positive Retirement Outcomes:

• SAVE THE CFO MONEY

Your investment/education

expertise:

• DIRECT COMMITTEE IMPACT

Excellent tool for participant & HCE

• INSIGHT MOST ADVISERS DON’T HAVE

Better information on plan health:

• GAIN, RETAIN AND REPRICE

Increases your total service offering:

HSA & Your Practice

Education

Adoption

Search

Implementation

• Consultants & Advisers • Employers & Employees

• Sales Force Training • CFP, IMCA and SHRM

• HSA Vendor Search • Monitoring & Prospecting

• Joint committee meetings• Implementation & Support

Access Point HSA



BPAS PARTNER CONFERENCE 2016

#BPASPC

Adding HSA to Your 401(k) Advisory Practice - David Ritchie - Ryan Tiernan

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