Do HSA Choices Interact with Retirement Savings Decisions?

We collected data on health plan choices and retirement savings decisions by employees from a large employer with just under a 16,000-person workforce that offered traditional health plans and a health savings account (HSA) in 2006. We also recorded employees' retirement contributions for the current and prior years along with their health plan choices. We examine (a) whether employees make joint choices for a traditional health plan versus an HSA and participation in an optional retirement plan, and (b) conditional on participation, the amount of the employee's contribution to the optional plan. Using health insurance claims and other human resources data to create control variables of income, job type, age, gender, number of dependents, and health status of the household, we find that those who elected a HSA were more likely to participate in a retirement savings account, and once invested, we find weak evidence that HSA policyholders are more likely to supplement retirement assets. When we account for strong prior preferences for savings behavior we cannot reject the null hypothesis that investing in HSAs does not affect retirement investing. More analysis from other employers with more significant HSA take-up is required to support the conclusions of this analysis.