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Half of Americans Still Don’t Grasp Benefits of HSAs

A new survey finds that only 51% of Americans consider themselves knowledgeable about the workings of health savings accounts (HSAs), suggesting that there is much work to be done to educate consumers, advisors and employers on the benefits.

A common misconception is that many Americans remain unaware that they can use their HSAs to pay for health care and long-term care expenses in retirement, according to the joint report by the LIMRA Secure Retirement Institute and Insured Retirement Institute.

Moreover, large percentages of consumers continue to confuse HSAs with FSAs, often thinking of them as a “use it or lose it” arrangement. In fact, among those who report being at least somewhat knowledgeable about HSAs, two in five mistakenly believe that balances must be spent by the end of the year or forfeited.

And even among those who are aware that an unused balance can be rolled forward, just slightly more than a quarter (26%) plan to use their HSA to save for future health care expenses.

The report’s findings are based on survey results of 2,141 Americans, 132 active financial advisors and 1,497 private employers with 10 or more employees conducted in 2017, as well as focus groups with another 20 financial advisors and a roundtable discussion with 14 plan providers and four asset management firm executives.

The findings also reveal that 9 in 10 advisors surveyed say they typically discuss health care or long-term care with clients, but only 7 in 10 have specifically addressed the use of an HSA. Lack of sufficient experience was cited by those who acknowledged that they did not discuss HSAs, but nearly all surveyed advisors (96%) said they would like to learn more.

“The findings underscore a great opportunity for the industry to educate consumers and advisors on the value of using HSAs for tax-free asset growth and as a financial hedge against retirement health care costs, which is still an uncommon strategy,” explains Judy Zaiken, corporate vice president and project director of the LIMRA Secure Retirement Institute.

Not surprisingly, some groups of consumers were more likely found to be knowledgeable about HSAs than others:

  • Among households with $100,000 or more in financial assets, 65% are knowledgeable, compared to just 40% of those with less wealth.

  • Men are more likely than women to report being knowledgeable about HSAs (58% of men versus 48% of women).

  • Married workers report more HSA knowledge than do non-married workers (69% versus 52%).

  • Consumers with children report more HSA knowledge than those without (55% versus 44%).

Meanwhile, the employer portion of the survey revealed that, as might be expected, the larger the employer the greater the interest in pairing an HDHP with an HSA. Overall, 85% of employers that offer a HDHP also offer an HSA. But the numbers were less than stellar for those employers that offer an HDHP but not an HSA. For this group, only 8% plan to add an HSA in the next two years, according to the findings.