Products June 27, 2017

Morningstar Analyzed HSA Plan Providers

The results of analysis shows there is room for improvement for HSAs, both as investing vehicles and spending vehicles.
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“HSAs [health savings accounts] are becoming increasingly popular, but investors have few resources at their disposal to navigate the hundreds of plans available to them,” says Leo Acheson, Morningstar’s lead research analyst for HSAs.

Morningstar Inc. published a new study assessing plans from 10 of the largest HSA plan providers: Alliant Credit Union, Bank of America, BenefitWallet, HealthEquity, HealthSavings Administrators, HSA Bank, Optum Bank, SelectAccount, The HSA Authority and UMB Bank. Morningstar evaluated the plans through two different lenses: one, as an investment vehicle to save for future medical expenses and the second as a spending vehicle to cover medical costs today.

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The results of the study show room for improvement needed across the board: Morningstar positively assessed only four of the 10 plans for use as an investment vehicle and three as a spending vehicle. Moreover, only one plan received a positive assessment on both fronts.

Morningstar’s manager research group evaluated HSA plans by assigning positive, neutral and negative scores to various criteria and aggregating those scores to reach an overall assessment for each plan, both as an investment vehicle and as a spending vehicle. As an investment vehicle, a plan had to earn two positive scores and no negative scores for menu design, quality of investments, and price to earn an overall positive assessment. An overall negative assessment means a plan scored negative in two of the three areas. As a spending vehicle, an HSA plan with no maintenance fee received an overall positive assessment, while a plan that charged fees regardless of the balance received a negative assessment. Plans that landed in between received a neutral assessment.

Morningstar’s assessments are as follows:

HSA Plan Provider / Overall Assessment as Investment Vehicle / Overall Assessment as Spending Vehicle

  • Alliant Credit Union / Negative / Positive
  • Bank of America / Neutral / Negative
  • BenefitWallet / Neutral / Neutral
  • HealthEquity / Positive / Neutral
  • HealthSavings Administrators / Neutral / Negative
  • HSA Bank / Neutral / Neutral
  • Optum Bank / Positive / Neutral
  • SelectAccount / Neutral / Positive
  • The HSA Authority / Positive / Positive
  • UMB Bank / N/A / Neutral

HSA Bank is Morningstar’s HSA plan provider. UMB Bank did not provide an investment menu and was therefore excluded from the investment vehicle evaluations.

“Now that the U.S. House of Representatives and Senate have introduced health care reform bills that would double HSA contribution limits, analysis of HSA plans will become crucial as investors and policymakers strive to better understand the provider marketplace. This report provides key context to understanding the HSA as an investment vehicle but also utilizing it as a spending vehicle,” says Jake Spiegel, senior analyst for policy research.

The full research report may be downloaded here.

Products June 27, 2017

Voya Launches Retirement Plan Check-Up Report

"Plan advisers can also use this as a tool to deepen relationships and continue to add value to a sponsor,” says Charlie Nelson, CEO of Retirement for Voya Financial.
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Voya Financial Inc. launched its Retirement Check-Up Report.

This new resource allows an employer to measure the health of its retirement plan based on the digital enrollment and savings decisions participants make online and through their mobile devices.

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The Retirement Check-Up Report is the follow-up to a Voya white paper titled “Using Decision Styles to Improve Financial Outcomes – Why Every Plan Needs a Retirement Check-Up,” written by behavioral economist Shlomo Benartzi, Ph.D., a professor at UCLA Anderson School of Management and a senior academic adviser to Voya’s Behavioral Finance Institute for Innovation.

By looking at the digital behaviors that lead to certain savings rates and investment choices, employers can obtain a view of their plan that they have never had before, Voya says. “If a plan’s average replacement income rate appears to be off track based on its report score, this can help the employer evaluate its options to get back on course, including a plan re-enrollment strategy,” says Charlie Nelson, CEO of Retirement for Voya Financial.

The white paper explained that people typically make decisions by one of two different styles—“instinctive” (quick and without much thought) and “reflective” (slow and deliberate). Applying this to the digital environment, Voya was able to study and categorize the decision styles of retirement plans. An index scoring system—the Reflection Index—was developed by looking at three dimensions of activity: whether participants paid attention online; whether they gathered additional information; and whether they made any trade-offs.

Through this research, Voya found a significant correlation between a plan’s Reflection Index score and the average projected retirement income of its participants. A plan that had more instinctive-decisionmaking participants was far more likely to have lower aggregated projected replacement income (below a 70% goal). Voya’s analysis found that 90% of plans were “off track” in terms of projected income and were categorized as being “instinctive” due to their participants’ digital decisionmaking styles.                                                                                        

Other research has shown that many individuals neglect to change their savings rates or re-balance their accounts once they enroll in a plan, according to Voya. The Check-Up Report can serve as a tool to help plans learn when to “course correct” and consider plan re-enrollment. 

For Voya plan sponsor clients and the participants they represent, Voya can create a custom Check-Up Report score report that lets the employer measure whether its plan, in the aggregate, is instinctive or reflective based on participant digital activity.

With more consumers making financial decisions on computers, phones and mobile devices—including choices about retirement savings—the need to pause and take time to course correct has never been greater, Voya says.

“The good news is that, even if a plan is not on the right path, there are a number of well-tested and readily available options a sponsor can consider to create a healthier plan,” Nelson says. “From auto-enrollment and auto-escalation features to re-enrollment strategies and better employer matching and default options, these tactics are generally easy to implement. Plan advisers can also use this as a tool to deepen relationships and continue to add value to a sponsor.”

Voya clients interested in a Retirement Check-Up Report can work with their plan adviser or relationship management contact to discuss how to apply these options. More information is available at Go.voya.com/reflectionindexvideo.

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