Wide knowledge gaps on HSAs and HDHPs remain

Employers may need to redouble their efforts to help employees understand the opportunity presented by a high deductible health plan with an accompanying health savings account.

When asked whether they had access to a HDHP at work, 34% of people responding to a recently published Employee Benefit Research Institute survey said they didn’t know.

“That’s disappointing, but not shocking,” says Will Applegate, vice president of HSA sales for Fidelity Investments. “It speaks to the need for greater engagement.”

In Fidelity’s own research, up to 30% of employees don’t understand the fact that HSA dollars can be saved for the long term. Last year, Fidelity published an updated estimate that an average married couple retiring at age 65 in 2014, over their remaining lifetimes, will incur an average of $220,000 in unreimbursed health expenses, including long-term care.

Also see: HSA growth linked to excise tax concerns

The EBRI survey also tested the proposition that employees who are more engaged in their health care than others contribute more to their HSAs. The data show that the expected result is indeed occurring. For example, last year nearly half (49%) of employees who participate in a HDHP and have “at least some health engagement” contributed at least $1,500 to an HSA last year, versus 40% who do not demonstrate engagement.

Similarly, nearly twice the proportion (20% vs. 11%) of employees lacking health engagement made no contribution to an HSA, than those who were more engaged in their health.

EBRI classified as “engaged” those employees who performed at least one of nine tasks, such as “checked whether my health plan would cover my care or medication,” and “talked to my doctor about other treatment options and costs.”

Also see: Making wellness and HSAs work together

The EBRI survey also tracked HDHP/HSA participation and employer contribution trends. Other highlights include:

• About 15% of the U.S. population is enrolled in a CDHP, and 57% of them also had a health reimbursement account or an HSA.
• More than one-third (35%) of employees with employer-provided health benefits and a choice of health plans, have access to a HDHP.
• While that 35% figure is part of a downward trend that began in 2008 when the figure was 40%, the drop might be overstated due to an increasing number of employees reporting they don’t know whether they have access to a HDHP, or not.
• Employer contributions of at least $1,000 to employees’ HSAs have been declining for employees with family coverage (from 73% in 1999, to 51% last year), while their contributions to employees with single coverage have gone up over a slightly shorter time frame, from a low point of 24% in 2011 to 34% last year.
• Employees’ own contribution to their HSAs are stronger for employees with family coverage, with 73% of such employees making contributions of $1,000 or more, versus 45% of those with single coverage.
• Income is closely correlated with HSA contribution amounts. Only 21% of workers with household income under $50,000 parked funds in an HSA last year, compared to 51% with households with incomes of $50,000 and above.

Income gap

Although persuading employees in lower income brackets to take full advantage of an HSA can be a tall order, Fidelity’s Applegate suggests one approach that can work. “When an employee moves from a traditional plan to a high-deductible plan, his cost will go down,” he said. “That’s the time to encourage them not to pocket the difference, but put it instead in an HSA.”

Also see: Expanding HDHP coverage of preventive services could benefit millions

That approach leverages the human tendency to resist change. It’s easier for employees to accept a lack of change in their paychecks, than to see the net amount decrease if they try to start parking funds in an HSA after having enjoyed the temporary windfall of seeing their premium drop.

Richard Stolz is a freelance writer based in Rockville, Maryland.