Products November 9, 2017

Alegeus Opens Marketplace for HSA and FSA Spending

The portal for eligible products and services will help employees make smarter purchase decisions and understand what can be paid for with health savings account and health care flexible spending account savings, the company says.

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Alegeus, a consumer-directed health care (CDHC) solutions provider, has expanded its online employee portal to include a virtual marketplace that will curate a wide range of HSA (health savings account) and FSA (flexible spending account) eligible products and services for purchase using account funds.

This expansion will not only make it easier for employees to spend their account dollars on eligible items and maximize account usage, it will also empower them to make smarter purchase decisions by letting them name their price for services. Thanks to partnerships accessible only through the portal, Alegeus merchants will offer a wide array of qualified vision, dental and medical products and services—contact lenses, MRIs and more.

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With this expansion, employees will have easy access to a marketplace of vendors that offer CDHC-eligible goods and services, and will be able to use their debit cards to purchase items electronically. Because all products offered through the portal are pre-determined to be HSA- and/or FSA-eligible, card transactions will be auto-substantiated, alleviating the hassle of having to submit receipts, and thereby creating efficiency for both Alegeus clients and employees.

Another goal of adding a retail experience to the Alegeus portal is to build employee fluency around the range of items that are HSA- and FSA-eligible. Benefit programs have tremendous potential to deliver real value to both employers and employees in the form of tax savings, greater control over health care dollars and increased benefit satisfaction; however, often these programs do not realize their full potential, Alegeus notes. It cites a report by the Aite Group that found 83% of eligible purchases today are being paid for out-of-pocket instead of using benefit account funds.

“At Alegeus, we constantly seek innovative ways for our clients to better empower health care consumers so that they can fully unlock the tremendous potential of CDHC benefits,” says Steven Auerbach, Alegeus CEO. “This enhancement of our consumer portal will not only simplify purchasing processes for both our clients and consumers, it will also enable consumers to make smarter purchasing decisions and become more engaged in their health care.”

The new marketplace will be available in the Alegeus portal by the end of the year.
Participants November 9, 2017

401(k) Contributions a Struggle for Many Lower Wage Workers

Seventy percent of those with less than $45,000 in household income say they cannot afford to save for retirement.

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While participation in 401(k) plans is high across the board for middle-income workers, the lower their income, the less likely they are to reap the full advantages of their employer’s retirement savings plan, MassMutual found in a survey.

Overall, 84% of middle-income workers save enough in their retirement plan to receive the full match from their employer. Among those making $75,000 or more, it rises to 90%. However, for those making between $35,000 and $44,000, only 67% save enough to receive the full match, and for those in the $45,000 to $74,000 income range, it is 77%.

Seventy percent of those with less than $45,000 in household income said they cannot afford to save for retirement. For those earning $75,000 or more, only 23% share this opinion.

Other reasons why those surveyed said they do not participate in their employer’s retirement plan are lack of a compelling match or no match at all (23%), the preference to manage money outside of the plan (14%) and wanting to invest in a vehicle that provides greater accessibility to the money (14%).

Sixty percent of those who were surveyed said their employer offers a match, with 5% matches being the most prevalent, cited by 21%. However, employer matches range between 2% and 7% or more, survey respondents said.

“MassMutual’s research shows that savers with higher incomes are far more likely to contribute a higher percentage of their income and take full advantage of matching contributions,” says Tom Foster, national spokesperson for MassMutual’s Workplace Solutions. “It highlights the need for more education, especially about available strategies to help make retirement savings more affordable for more people. Employers and financial advisers need to help educate workers, especially those who may see savings as unaffordable, to find dollars and then make the most of them.”

To help participants, Foster recommends that advisers recommend automatic enrollment paired with auto escalation, as well as education through group and one-on-one meetings as well as online resources, and educational campaigns.

Foster also says that advisers can educate participants about the saver’s credit. For the 2017 tax year, a married couple that files their taxes jointly and has an adjusted gross income of no more than $37,000 can obtain a credit of 50% of their retirement savings. For those with an adjusted gross income of between $40,001 and $62,000, it drops to a 10% credit, and for those with incomes above that range, it phases out completely.

Some participants may also not be aware of the tax advantages of 401(k)s or of their employer’s match, Foster adds.

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