Alignment of Wealth and Health ... The 401(k) and HSA

By Todd Kittell

As an independent third party administrator (TPA), we are often asked by advisers to comment on emerging trends in the industry. One recent trend that is getting a significant amount of attention is the alignment of wealth and health - specifically 401(k) Plans and HSAs. How does this impact the role and opportunity for financial advisers?

As an adviser in the retirement plan market, you have probably already noticed many of the leading 401(k) investment recordkeepers are redesigning the participant web portals with tools and calculators that incorporate both retirement assets and health care assumptions into projections. The primary reason for this is that studies continue to demonstrate that rising healthcare costs may significantly impact or possibly derail a comfortable retirement. By shedding more light on this and bringing the issue to the forefront, the hope is that participants will begin to factor healthcare cost into their overall retirement plan.

Is this enough? Probably not. This is where we see the function of the financial adviser expanding beyond the traditional role focusing on accumulation of retirement assets and more into a holistic role include healthcare planning. One such tool for advisers to become familiar with is a Health Savings Account (HSA). 

Unfortunately, many financial advisers shy away from HSA conversations because they assume the client works with a health care broker, or the insurance company addresses it during the open enrollment period, or they simply do not know enough about HSAs. What they may not know is that an HSA operates similarly to a 401(k) plan in that employees fund it with pre-tax dollars, employers can contribute tax deductible contributions, and participants can invest their accounts to grow tax free.

Similarly to 401(k) plans, HSAs must adhere to a complex set of IRS regulations. Advisers are not encouraged to pass themselves off as an HSA expert without specific experience and credentials. Unlike many other third party administrators that specialize in either retirement administration or health care administration, Lifetime Benefit Solutions is positioned to provide services and support to you in both areas. 

We believe the alignment of 401(k)s and HSAs will continue to grow, and the role of the financial adviser will become critical. For financial advisers focusing primarily on individual and/or retirement plans, an HSA represents a great opportunity to solidify the adviser relationship and provide clients with additional education and support, as well as provide a new source of assets to manage coincident with the retirement assets.

We invite you to contact our office to discuss and leverage our expertise as you navigate the alignment of wealth and health into your practice.

Lifetime Benefit Solutions is a national leader in developing and delivering health-related benefits plans – partnering with our customers to deliver value and promote employee health and wellness.

Flexible employee benefit programs, intelligently and creatively customized to your company’s unique situation.