Business Owners Seeking Adviser Help With HSAs

Just over half think health care will be the biggest expense in retirement, a Nationwide Retirement Institute survey found.

Business owners are interested in speaking with advisers about health savings accounts (HSAs), a survey by Nationwide Retirement Institute found. That is driven by the fact that 55% of business owners think health care is the biggest expense for retirees, followed by housing (24%), food (6%) and transportation (1%).

However, only 20% of business owners say they fully understand how HSAs work. Many of the business owners did not know that HSAs must be paired with high-deductible health plans (HDHPs). Many also did not know that employers can contribute to an HSA and that the balances carry over year-to-year.

Seventy-seven percent of business owners are also interested in speaking with an adviser about employee benefits that reduce company taxes, offer employees tax savings (74%) and that may increase retirement savings (76%).

“Business owners want to talk about employee benefit solutions that offer tax savings and can help increase retirement savings,” says Kristi Rodriguez, leader of the Nationwide Retirement Institute. “A real opportunity exists for financial advisers to play a major role in educating business owners about the benefits of health savings accounts for both their business and their employees.”

Business owners who offer HSAs to their employees were asked about the benefits of such plans. Fifty-six percent said tax advantages, 58% said the ability to cover health care deductibles and out-of-pocket expenses, and 43% said the ability to save for retirement. Those who are not offering HSAs said they are unsure of their advantages.

“Health savings accounts are effective tools for business owners and employees alike,” says John Carter, president of Nationwide’s retirement plan business. “They can supplement retirement savings plans by promoting greater savings and easing retirement concerns around health care costs, while offering special tax treatment not found in other retirement accounts.”

They survey also found that 41% of business owners offer their employees HSAs, and 21% are considering doing so. Thirty-eight percent said they are not considering offering an HSA. The larger the company, the more likely it is to offer an HSA; 59% of companies with 51 to 100 employees offer an HSA and 60% of companies with more than 100 employees offer one, whereas only 25% of companies with 50 or fewer employees have an HSA in place.

Younger business owners are also more likely to offer an HSA. Eighty-one percent of Millennial business owners offer an HSA, compared to 44% of Gen X and 25% of Boomers.

Edelman Intelligence conducted the online survey of 406 business owners for Nationwide Retirement Institute in February.