Employees Not Fully Prepared to Manage Health Care Responsibility

Consumers struggle with finances and don’t think they can afford to save for health care, according to an Alegeus survey of 1,400 U.S. health care consumers.

This perception impacts their willingness and ability to realize the cost savings a tax-advantaged health care benefit account delivers, whether a health savings account (HSA), flexible spending account (FSA) or health reimbursement account (HRA). The firm says if consumers used pre-tax dollars, instead of post-tax dollars, to pay for their eligible out-of-pocket medical expenses, they would save 30% on average each year.

When choosing health insurance plans, 51% of survey respondents indicated they struggle to understand the tradeoffs between different plan options, and 42% said they are not confident they understand how health insurance works. In addition, respondents were unable to differentiate the following themes:

• FSA use-it-or-lose-it versus HSA saving and investment opportunities;
• FSA one-time contributions versus HSA flexibility to open an account and contribute at any time; and
• FSA fund access on day one versus HSA fund access upon contributions.

Respondents also lacked knowledge about who is eligible to participate in tax-advantaged savings accounts and what constitutes a qualifying health plan, as well as HSA portability if they leave their employer.

Predicting out-of-pocket health care costs remains the most stressful aspect of managing health care. Fifty-five percent said they can’t predict the amount of health care services they will consume this year; 51% can’t forecast likely out-of-pocket costs for this plan year; and 58% don’t know or underestimate the amount health care costs in retirement. And, while some HSAs allow employees to invest their health care savings, 55% of survey respondents reported they are not confident in their ability to evaluate and make decisions about investments.

Alegeus found 40% want to take a more active role in managing their health care finances; however, they cited lack of knowledge, time, access to information, encouragement and support tools as impediments to doing so.

Consumers that are already enrolled in HSAs are more fluent, more engaged, and make savvier health and financial decisions than the general public, according to the survey. Eighty percent of HSA holders are more likely to be saving aggressively for their long-term health care costs; 57% say their No. 1 health care priority is getting better value for their money or saving for the future; and 54% are more confident when forecasting out-of-pocket costs.

The full survey report may be downloaded from here.