Empower extends health services for retirement plan clients

Empower wants to be nearly a one-stop shop for employee benefits, today debuting a “consumer-directed health care” package that will live alongside its retirement plans.

It extends the company’s business well beyond the health savings accounts it has provided since 2017. The new Empower Consumer Directed Health service includes flexible spending accounts, health reimbursement arrangements, voluntary employees’ beneficiary association plans, wellness incentives, transportation benefits, and other options, the firm stated.

The company’s new focus on benefits comes as retirement plan advisors have increasingly offered health and other benefit services to the employers they work with. HSAs have also been growing in terms of accounts, total assets, and the percentage of money that is invested rather than sitting in cash.

And, in the just under 10 years since it formed through a series of mergers and acquisitions, Empower has become one of the biggest retirement plan providers in the country. It currently administers more than $1.7 trillion in assets among 19 million people across its retirement, advice, wealth management, and investment lines.

“This experience is going to be solely under the Empower brand and it going to be fully integrated in the Empower digital experience,” said Dave Gray, executive vice president for enterprise solutions at the firm.

There will be “a great role and opportunity for advisors” through the new packaged service, partially through recommending funds in the core lineup of the HSA investment menu, Gray said. Additionally, plans can offer brokerage windows for HSA participants who want to choose investments beyond that menu, he said.

Widely, HSAs stand to become a more important part of wealth management, as younger workers increasingly have such accounts as options early in their careers and will have decades to amass assets within them, he said.

Empower, which launched an HSA option for employer clients in 2017, does not break out the size of that business line, he said.

“We expect this to be a growth market. We expect more employers to move to high deductible plans,” he said. Part of that trend will be employers bundling HSAs and other benefits with their defined-contribution plans, he said.

The company partnered with Alegeus Technologies for the integrated health and wealth service.

For employees, health care is the top benefit they cite, with 55 percent of people in a recent survey by Cerulli calling it the most important. Retirement plans came in second, at 21 percent, followed by paid time off, at 17 percent.

HSAs, which represent a combination of health and retirement savings, represented $137 billion among 38 million accounts in mid-2024, data from consulting firm Devenir show. Of that total, about $56 billion was in investments, rather than cash. By the end of 2026, the firm projects the HSA market to reach $175 billion among 43 million accounts.