Employees struggle with medical costs but overlook HSAs
- Employees aren't taking advantage of health savings accounts (HSAs), even though 82% cite medical expenses as their biggest challenge, according to a Willis Towers Watson poll, the 2018 Health Accounts Employee Attitudes Survey. Only 25% of respondents ranked contributing to an HSA as a current high financial priority, which follows behind saving for retirement through a 401(k), paying day-to-day expenses and reducing debt.
- The survey particularly notes that many employees do not use their HSA as a savings vehicle despite the many tax advantages to doing so, and instead use the accounts to pay immediate health expenses — but that isn't necessarily a bad thing. "That may be the appropriate way to use these accounts, especially early in an employee's career when finances are tight, because there is value in an HSA as a short-term spending account and emergency savings," David Speier, WTW's managing director, Benefits Accounts, said in a statement.
- Survey results also showed that employees who hold flexible spending accounts (FSAs) might be short-changing themselves, too. Although 69% of FSA account holders reviewed their previous healthcare expenses to figure out their contribution, many still lose money with these accounts. According to the results, 48% of employees said they could have set aside more money; 36% often hurriedly spend the money in the account before year's end; and 32% have trouble spending all the money in the account by the end of the year.
HSAs have seen considerable growth as of late as employers change up plan design in order to save money. HSAs are often paired with high deductible health plans as a vehicle for employees to stash money away and become better consumers of their own healthcare — but employers have run into some trouble, as many employees still don't quite understand how their accounts work.
A recent Unum report found that employees spend 30 minutes or less reviewing their open enrollment materials, and another study found that only 10% of employers think workers understand their benefits. A comprehensive plan to communicate these offerings is necessary. For this reason, more employers are investing in better technology in order to assist employees with decision-making and offer access to benefits information through multiple channels, 24/7, year-round. Better informed workers will likely make better use of HSAs, FSAs and other benefits — and help employers save money in the future.