The SHRM report also tells the tale of how two tax-advantaged benefit accounts on different evolutionary paths – health savings accounts (HSAs) and flexible spending accounts (FSAs).
Health Savings Accounts
More than half of employers – 56% to be exact – now offer an HSA, which is not surprising given the growth of CDHPs. Employer-provided HSAs have grown by 12% over the last five years.
Additionally, 37% of employers surveyed said they contribute to their employees’ HSAs, up 5% since 2014. Employer HSA funding is one way organizations give employees more incentive to try an CDHP while also reducing corporate taxes.
The continued growth in this employee benefit could mean that more employees will look for employer HSA contributions as part of their process to evaluate job opportunities in the future, similar to the value placed on 401(k) contribution matching.
Flexible Spending Accounts
While HSA program growth has been steady, flexible spending accounts have declined a bit. Health care FSAs remain the most common tax-advantaged health care account offered by employers, but the number of organizations offering them has fallen from 68% in 2014 to 63% in 2018.
HSAs have risen in prevalence by 5%, and medical FSAs have declined by the same 5%. I expect much of the latter has resulted from HDHPs and HSAs being treated as “package deal” by employers and benefits advisors. The savings element offered by HSAs and less rigid substantiation guidelines are also likely contributors if there is indeed a continued migration from FSAs to HSAs.
Health Reimbursement Arrangements
Finally, the number of employers offering health reimbursement arrangements (HRAs) has remained relatively steady in the last five years, growing in prevalence by 2% from 2014 to 2018.
HRAs remain the least common employer account, but the level of granular control and employer ownership of these accounts continues to make them appealing for organizations that want to incentivize and empower employees while protecting the organization’s health care investment.