Client Service April 13, 2021

The Inner Workings of HSAs

Speakers at the virtual PLANSPONSOR 2021 HSA Conference touted the benefits of health savings accounts and explained what HSA rules plan sponsors should know.

Reported by


Speaking during the virtual PLANSPONSOR 2021 HSA Conference on Tuesday, Roy Ramthun, founder and president of HSA Consulting Services LLC, said the best way to understand a health savings account (HSA) is to think of it as a bank account that is typically paired with a high-deductible health plan (HDHP), or an HSA-qualified health plan.

He said HSAs are paired with such plans to help participants in HDHPs meet the expenses that come with the plans and to provide them with tax savings during the process.

Want the latest retirement plan adviser news and insights? Sign up for PLANADVISER newsletters.

“Anyone covered by a high-deductible health plan can participate in an HSA,” he said. “The only people who may be covered by that type of plan who cannot participate are tax dependents; anyone enrolled in Medicare, Medicaid or Tricare; or anyone participating in health FSAs [flexible spending accounts] or HRAs [health reimbursement arrangements]; or anyone covered by other insurance with no or low deductibles.” In 2021, the minimum deductible is $1,400 for an individual and $2,800 for a family, Ramthun said.

Other than their triple tax advantages—contributions are tax-free, profits on investments are tax-free and withdrawals used for qualified medical expenses are tax-free—there are two other main benefits of HSAs, Ramthun said.

“Lower premiums help fund HSAs; in general, a high-deductible health plan tends to bring your premiums down, and that money is then available to help you fund your HSA account,” he said.  “Also, account holders get free preventative health care below the deductible.”

Ramthun added that HSA-compatible insurance and coverage extend to a wide variety of medical needs, including preventive care, dental coverage, vision coverage, cancer and other specific illness insurance, hospital indemnity insurance, accident insurance, medical liability insurance and discount cards.

Zack Hoffmann-Richards, an associate with Groom Law Group, said he favors HSAs, particularly because of their triple tax advantages, lack of income minimums or limits, and additional catch-up contributions permitted at age 55.

“They also decrease employer and employee income and payroll taxes,” Hoffmann-Richards said. “Employer contributions are exempt from federal income and employment taxes, and, unlike FSAs and HRAs, employers are not required to determine if employees use their HSA contributions for qualified medical expenses because the account is the property of the account holder, who is responsible for its management. If the account holder distributes money from the account for non-medical expenses under the age of 65, that money will be subject to income tax and a 20% penalty. Only if the account holder is disabled or 65 and older will those fees not apply.”

The IRS also permits HSA holders to make a one-time transfer from a traditional individual retirement account (IRA) or a Roth IRA to an HSA, Hoffmann-Richards continued. “However, both accounts must be owned by the same individual, and they must be eligible to contribute to an HSA for that year.”

Hoffmann-Richards said IRS Publication 502 contains all the details about what medical expenses an HSA can cover. Recent changes the IRS made now allow for HSAs to cover COVID-19 testing and treatment, telehealth services and over-the-counter (OTC) drugs and medicines, even if they are not prescribed, as well as menstrual care products and insurance premiums, he said.

He said the accounts can cover the account holder, their spouse and any qualifying children or relatives whom the account holder claims as dependents on their taxes.

HSAs are user-friendly because they typically are tied to a debit card or online bill payment system, said Jamie Greenleaf, lead adviser and principal at Cafaro Greenleaf. “The money rolls over year after year, and, if invested, can grow substantially.”

The IRS also permits employers to automatically enroll their workers in an HSA as long as it includes an opt-out provision, she said.

“We think automatically enrolling workers in HSAs is a best practice because it helps participants drive their success in building dollars for medical equity throughout their lifetime,” Greenleaf said.

Finally, Hoffmann-Richards noted that HSAs are generally not subject to the Employee Retirement Income Security Act (ERISA). “The DOL [Department of Labor] issued two Field Assistance Bulletins granting sponsors safe harbor from ERISA if the establishment of the HSA is completely voluntary,” he said.

Data & Research April 13, 2021

Number of Women in Asset Management Roles Remains Stagnant

Morningstar and the CFA Institute have found the United States is among the nations with the lowest number of women in financial services.

Reported by


Despite the successes some female fund managers have seen over the years, women’s involvement in the investment management industry has had few gains for more than two decades.

That’s what new research from Morningstar and the Chartered Financial Analyst (CFA) Institute found, with the groups reporting that gender diversity of fund managers globally has remained largely unchanged over the past 20 years. The percentage of global fund managers who are female has been about 14% since 2000.

Never miss a story — sign up for PLANADVISER newsletters to keep up on the latest retirement plan adviser news.

Some regions throughout the globe, however, saw higher representations of women. According to the study, in parts of Asia, including China, Singapore, South Korea and Hong Kong, more than 20% of managers were women. The United States, United Kingdom and Germany, meanwhile, were on the lower end of the list, closer to or below the global average of 14%.

The study also found women’s representation varies by types of fund. For example, on a global scale, fixed income managers were more likely to be women, more so than those in equity and asset allocation funds. However, asset allocation funds have seen an increase in fund managers who are women in recent years, especially in countries throughout Asia.

“There were countries where we saw higher rates of female managers, like parts of Asia; that’s an area of the world where our industry is growing quickly,” said Laura Lutton, head of asset management solutions at Morningstar, during a virtual executive roundtable hosted by the Women Business Collaborative, the Investment Adviser Association and Morningstar. “So, where we see growth, we often see better opportunities for women, but clearly we’ve got a long way to go.”

In the United States, the number of CFA Institute members who are women has remained low, at just below 20%, according to the organization.

Sarah Maynard, global head of external inclusion and diversity strategies and programs at the CFA Institute, pushed back against the argument that female representation is low because some women have left the workforce due to growing caregiving needs, citing the growing talent pipeline of women and the increasing number of female leaders in the financial services industry. “That’s certainly not an excuse that I want to lean on,” she said.

The virtual roundtable also featured several female CEOs who are currently leading the financial services industry, including Franklin Templeton President and CEO Jenny Johnson, New York Life Investment Management CEO Yie-Hsin Hung and Russell Investments CEO Michelle Seitz.

Seitz noted that while the industry continuously sees pools of qualified women looking to work in the financial services through the U.S., only a small number of women are leaders in the workforce.

“What we need to make sure of is that once they get within our pipeline, that we include them on fast tracks to have significant leadership roles within the industry,” she said.

Johnson agreed with Seitz, adding that firms must start at the “grassroots” when recruiting talent—considering what attracts most candidates to the firm or industry and expanding on their candidate pools, Johnson says. “You’re not going to improve it unless you honestly added it and put a stake in the ground and are committed to figuring out ways to improve it,” she added.

In order to get more female candidates to be leaders in the industry, Hung said the current top leadership must be devoted to increasing diversity. “In order to change the outcome, we have to change our processes,” she said.

On the talent acquisition front, Hung said this means having diverse interviewers to minimize unconscious biases, training interviewers on behavioral-based interviewing and focusing less on questions based on years of experience and more on situational ones.

Hung also said creating talent management positions is an important step in increasing diversity. At New York Life Investment Management, the company has a chief diversity officer and head of talent management.

“For all of us, it’s clear that we have to have the goal, the senior intent and focus and willingness to keep trying different things and see what works,” she said. “But it is also being very methodical, looking at every step around our talent that I think will ultimately shape the pipeline and increase the likelihood that we’ll achieve the outcome that all of us want to see.”

«