Data and Research September 26, 2016

HSAs Can Help Employers Rein In Medical Costs

A study shows that employees in high-deductible health plans are foregoing care because of the cost, and this could result in more catastrophic and disability claims.

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More and more employers are offering high-deductible health plans, but research suggests some employees lack the knowledge needed to understand their benefits and take full advantage of them.

Even though the number of employers offering high-deductible health plans (HDHP) seems to be on the rise, three out of five employers don’t offer a health savings account (HSA) alongside these benefits, according to research by The Guardian Life Insurance Company of America. The company adds that “this is especially true of businesses with fewer than 50 employees—a segment that accounts for nearly 30% of all working Americans.”

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The study also suggests that employees with HDHPs require “more support and education in the workplace to understand their options and to mitigate longer-term health risks.”  

A health savings account (HSA) offered in conjunction with an HDHP enables employees to set aside pre-tax dollars to cover out-of-pocket medical expenses. This is important to note considering the rising costs of health care and research that indicates employees have trouble understanding their employer-sponsored benefits.

Employers may also contribute to their employees’ HSA to provide a base level of funding. However, Guardian’s study notes that even when employees have access to HSAs, many are unsure of how they work or how to fully utilize them.

According to Guardian, three in five workers are unable to pay a $3,000 out-of-pocket medical expense. Faced with such an expense, the study found, 37% would have to make a deal with the provider to pay over time, 34% would have to put the bill on a credit card, 9% would ask for a loan from friends/family, and 6% would take a bank loan.

In light of rising out-of-pocket costs, several employees reported that they did one of the following in the past year: skipped a doctor visit, delayed a recommended procedure or surgery, failed to fill a prescription, or avoided a blood test or X-rays.

“The study reveals a correlation between high out-of-pocket medical costs and delaying or ignoring medical care,” says Dave Mahder, vice president and chief marketing officer of group and worksite markets at Guardian Life. “HDHPs help employers rein in medical costs, but potentially at the risk of higher catastrophic medical and disability claims in the long term. Employers offering HDHPs can help employees fund out-of-pocket expenses through health savings accounts and supplemental health benefits, but there’s still room for improvement.”

These findings are from Guardian’s “A Crack in the Foundation,” the first set of findings from the fourth annual Guardian Workplace Benefits Study. The full report can be found online here.

Data and Research September 26, 2016

Online Connection to Accounts Can Boost Savings

However, only 37% of survey respondents have used mobile apps to access their investment accounts, which indicates, PNC says, that firms could do more to promote these resources.
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Investors who frequently use online tools and consult with a financial adviser have higher savings than those who do not, according to a survey by The PNC Financial Services Group, Inc.

The most digitally connected investors have the highest average household income and highest total investable assets. They spend an average of three hours and forty-two minutes a week reviewing their finances or looking up financial information on a computer or mobile device. Of the 45% of survey participants who say they are “very connected” to their finances, 50% look at financial headlines every day and 50% use a mobile application to access their accounts. More than one-third of these “very connected” investors would like even more information.

“The most digitally connected investors tend to be better informed, which contributes to their success and positions them well for the future,” says Rich Ramassini, director of strategy for PNC Investments. “For instance, they are more likely to know about the fiduciary standard for investment advisers, and are more likely to consult with an adviser who follows the standard. The information and advice they access should give them an advantage as they save and invest for retirement.”

The survey also found that 60% of the “very connected” investors rely on an adviser. Two-thirds of investors would like to hear from their financial advisers, particularly during an economic downturn.

“Making a change in a portfolio during periods of market volatility is the chief source of regret among investors,” Ramassinin says. “A financial adviser can be a steady hand in times of stress and help avoid panic selling or buying. When it comes to successful saving, information—particularly information gained through a combination of digital resources and expert advice—is powerful.

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The most commonly used app is for mobile banking, which 58% of respondents have used in the past year. However, only 37% have used mobile apps to access their investment accounts, which indicates, PNC says, that firms could do more to promote these resources.

Artemis Strategy Group conducted the survey for PNC among 1,002 adults between the ages of 35 and 75 in May. Those age 45 or older had investable assets of $100,000 or more, and those between the ages of 35 and 44 had investable assets of $50,000 or more.

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