How to Connect the Dots Between Retirement, Health Benefits for Workers

Too often, health care and retirement benefits sit in silos.

“We don’t really talk about them together,” Kevin Mahoney, managing director at New York City-based financial services firm Raymond James, said at SHRM25 in San Diego. “It’s not as common to think of it as a benefit pool. It’s, ‘Retirement is over here. Health care is over there.’ Then [there’s] the FSA [flexible spending account], the HSA [health savings account].”

But the overlap between the two is “becoming obvious,” he said: There is a connection between health care costs and retirement readiness. Delayed retirement can increase health care costs for companies, as older employees tend to have higher health care utilization rates due to age-related medical conditions. And tax-advantaged accounts such as the HSA can be attractive not only for medical expenses but also as a retirement vehicle.

Although there are lots of new and eye-catching employee benefits out there, employees — and employers — are still most concerned about their health and retirement benefits. 

At the end of the day, health care and retirement are still “the meat and potatoes that are driving attraction and retention of talent,” said Harrison Newman, another panelist at the SHRM25 session and vice president of Corporate Synergies, an insurance and employee benefits brokerage and consultancy in Camden, N.J. He cited the SHRM 2025 Employee Benefits Survey, which found that employers consider health care to be the most vital benefits offering, followed by retirement savings and planning.

Employers would be well served to educate employees about the connections between these benefits to help them with health care expenses and management, as well as retirement readiness, panelists said.

HR Pros Are ‘the Don Drapers of the World’

Having a communication strategy is the most important thing when it comes to benefits, but too many employers don’t do a good job, leaving employees dissatisfied, unengaged, and confused about their offerings. That presents a massive opportunity for benefits and HR leaders, Newman said, so that employees can be physically healthy and financially ready — and prepared for their post-work years. 

“It’s Marketing 101. The benefits and HR people, in many ways, are marketers,” he said. “You guys are the Don Drapers of the world. When it comes to the benefits packages, you are investing so much time and effort, you want to make sure they feel value out of it, and the way to do that is to communicate to them in a way where they understand the value.”

HR professionals are busy, but they can — and should — lean on their benefits advisors, brokers, and vendors to educate and communicate with employees, Newman said. “You don’t need to be the expert in communicating this, but you do have to have an expert by your side who can communicate it,” he said.

Get People Prepared for Retirement

Ensuring that people are financially ready for retirement is key. Readiness is often helped by a robust portfolio of benefits — health care, financial wellness, and of course retirement plans, such as 401(k)s and pensions — but fostering an understanding of those options is also important. 

A lot of employees want to retire, but they simply don’t think they can afford to. That’s not good for employees or employers, who will likely see their health care costs rise due to older workers staying in roles longer than they want to, Newman said.

“We want employees to retire when they’re ready to retire,” he said.

Take Out the ‘Scary’ Words About Health Plans

Employees need to understand the basics around health plans. Often, employees default to a preferred provider organization (PPO) plan because they are afraid of a high-deductible health plan (HDHP), said panelist Larry Maistelman, a health and welfare consultant at Grand Forks, N.D.-based financial services firm Alerus. 

He recounted a scenario many HR pros are likely familiar with: When presenting about various health plans during open enrollment meetings, he often notices that employees lose interest as soon as he begins talking about high-deductible plans.

“When [they] hear the word ‘high’ and the word ‘deductible, I am officially the Charlie Brown teacher. [Everyone has] zoned me out,” Maistelman said.  

“It’s a scary thing. It’s a high deductible. They immediately say, ‘I don’t want that,’ ” Maistelman said. But employers can get workers to understand what an HDHP is, and its associated benefits, just by changing up the language and verbiage.

“If in the same exact meeting … you said you have an LPP — the low-cost premium plan. Now they’re listening to you because you took the scary word away,” he said.  

Employers can then educate workers about some of the benefits and differences between those health plans. In the instance of the HDHP, they can tout, if applicable, the availability of an HSA to help with medical costs, as well as to save for an employee’s retirement years. Employers should also explain that there are often negotiated rates with the HDHP, so it’s not as likely that employees are paying full costs for everything, Maistelman said.  

Educate About HSAs — and Investment Options

One of the biggest missed opportunities, the panelists said, is not utilizing HSAs to their full advantage — namely, not investing the funds so they grow.

“The piece that’s really misunderstood is how to use the high-deductible plan and the HSA effectively together, and how that integrates with your other financial benefits,” Mahoney said. “The HSA right now, in my opinion, is badly misused. People think of it as a health spending account. It’s not. It’s a health savings account, and people don’t invest it.”

Just 9% of employees invest in their HSA, according to Devenir, a research firm and investment consultant firm. 

Employers need to do a much better job helping employees understand how to best manage and use their HSA to maximize their dollars, particularly in retirement, Maistelman said, adding that companies can involve their 401(k) providers to help educate employees about HSA investing.

“My advice is getting the 401(k) side of the house involved to help manage those dollars, because right now it’s a massive disconnect,” he said. “It’s completely siloed in two different places.”