TIAA rolls out new HSA to complement retirement plan
With rising healthcare costs and longer life expectancies, plan sponsors are increasingly looking to help employees save for their retirement medical expenses.
Financial services company TIAA is launching a Health Savings Account (HSA) to help employees allocate funds toward their healthcare costs.
“Healthcare expenses are increasingly connected to an individual’s ability to retire and maintain a good standard of living throughout their lives,” says Lori Dickerson Fouché, CEO of TIAA.
A 65-year-old couple would need approximately $301,000 to cover out-of-pocket healthcare expenses in retirement, according to a report from Employee Benefit Research Institute. Even employers feel the financial burden: more than 90% of plan sponsors say that rising costs are a significant concern for retirement security, TIAA research finds.
HSAs are becoming a more popular savings vehicle for workers. Bank of America launched last spring a digital tool to make it easier for employees to access their HSA account information. Companies like MetLife and WageWorks also have boosted or added HSA plans over the last year.
While these accounts are an opportunity to invest in the long-term, just 25% of HSA-holders are saving for healthcare expenses in retirement, according to a Plan Sponsor Council of America report. However, TIAA is hoping their clients will take advantage of these funds to save for their future care.
“As individual life spans increase, so does the potential cost of medical care in retirement,” Fouché says. “As a result, it makes perfect sense that more plan sponsors are looking at ways to help their employees take advantage of savings opportunities that help them prepare for retirement health expenses.”
TIAA clients and participants can access the HSA — which will work in concert with the company’s retirement plans — through financial services company HealthEquity. It will be available in the first quarter to clients that offer their employees a high deductible health plan.