Health Savings Accounts Find New Life In The Gig Economy

At a time when COVID-19 has put healthcare at the forefront of public concerns, CEO Sean Engelking of Starship, a provider of health savings accounts (HSAs), says neither the pandemic nor politics are likely to slow his sector’s rapid growth. In fact, continued medical-cost hikes plus a growing need for individuals and families to pay for rising medical expenses are making the outlook bright, Engelking told Karen Webster in a recent interview.

“It’s one of the kind of businesses that has done well during COVID,” said Engelking, who also founded Starship. “We have acquired more customers during the time of COVID than we have during our entire company’s existence. And we’re expecting to double that by the end of the year.”

Part of Starship’s growth is being driven by macroeconomics — in particular, the surge in companies that use independent contractors (gig workers) and offer them benefits. Engelking points to his firm’s work with Uber and Postmates for some of that growth, as well as to the fact that Starship’s phone-based app has made accessing its HSAs simpler than ever before.

He said company health plans “are asking you to spend more of your own money before insurance kicks in, and that is why HSA adoption has skyrocketed. There’s been almost double-digit growth since the last financial crisis.”

Making HSAs Simple

Even so, roughly one-third of Americans either don’t want or don’t fund an HSA and approximately half of those who are eligible and have them didn’t put money in their account over the past year.

Engelking and Webster both said the causes for not opening an HSA or contributing to one differ widely.  Among the most common reasons are that they’re confusing, costly or constraining. In short, many people simply don’t have the additional money right now to set aside or are reluctant to tie what little extra savings they have to an account that limits what they can spend their money on.

But Engelking said his firm set out to build a different HSA product that would solve just those problems. The result, he said, was to create an HSA for people that will never put a dollar of their own money into their accounts, relying instead on others for contributions. For example, Starship plans to roll out a program later this year that will let Uber riders add tips to a driver’s HSA.

“One of the really fascinating things you can do with an HSA that most folks don’t know is that anybody can put money into this account,” Engelking said. “It’s quite literally a tax-advantaged ‘GoFundMe’ account.”

Politics Are A Factor

For a company that sits at the intersection of changes to healthcare and changes to labor, Engelking admits that Starship finds itself talking about politics more than “I think any startup should.”

But, he argues, that his company is actually in a unique position that’s less “radioactive” than many of Starship’s gig-economy client companies. Those firms are dealing with politicians like those in California, where gig companies face plenty of pressure over whether their workers are independent contractors or “regular” employees.

“I think it’s really at least with our biggest partners a question of, ‘Are we providing HSAs to employees or to independent contractors?’”he said. “I think in California, the cat’s out of the bag, so it really doesn’t matter if they’re employees or independent contractors at this point.”

On the federal level, Engelking also sees tailwinds for his business regardless of who wins the White House in November. “Whether it’s Trump or Biden that wins, both are going to expand HSAs,” he said. “That’s not a big risk for us.”

However, one area of change he’d like to see is an easing of the rules and requirements that currently make many people ineligible for HSAs.

“My personal view is that at the very least, everybody should be able to have access to an HSA,” Engelking said. “If you want one, you should have one — regardless of health insurance.”