Faced with rising inflation and economic uncertainty, many Americans have renewed fears that they are unprepared to manage their short- and long-term healthcare finances, and believe their employer should be doing more to help.
This is according to new survey results by Alegeus, which find that two-thirds (66%) of respondents made finance-related resolutions for 2023—with many vowing to save more (54%), spend less (44%) or stick to a budget (38%). But of those respondents making finance-related resolutions this year, nearly 8 in 10 (78%) stated that healthcare spending will factor into their efforts.
The survey of 1,018 U.S. respondents also found that 65% are at least “somewhat concerned” about their ability to afford care for themselves or their family this year, and that number jumps to nearly 80% when asked about their ability to afford care longer term, into retirement.
Alegeus observes that these concerns stem from various economic factors—like inflation impacting budgets (60%) and rising out-of-pocket costs associated with employer health benefits (40%)—that are fueling continued uncertainties post-pandemic. What’s more, few respondents feel they are prepared to manage their healthcare finances, with less than half only feeling “somewhat prepared.”
Many respondents are also of the mind that employers should provide the necessary tools to help employees address these concerns. According to the findings, 77% agree that their employer should bear significant responsibility for supporting them in their financial preparedness for healthcare costs.
When asked if they were to set an additional resolution specifically about their healthcare finances, respondents cited improving overall financial health (45%) and protecting themselves from unexpected healthcare expenses and medical debt by building up a savings cushion (37%).
That said, only 15% said they would make tax-free saving/spending a priority by enrolling in a health savings account (HSA) or a flexible spending account (FSA), or by taking advantage of an employer-provided health reimbursement arrangement (HRA).
Alegeus suggests that this lower number likely indicates a knowledge gap regarding the value of these programs, especially as employees can save upwards of $2,000 per year on taxes depending on their account elections and current tax rate.
In what seems to be an ongoing difficulty, HSAs, which offer the most significant tax advantages, are still too often under-utilized and under-emphasized by both employers and employees, causing them to miss out on significant savings opportunities. Consider, for example, that consumers spent $491 billion on out-of-pocket (OOP) healthcare costs in 2021, yet only $95 billion of 2021 OOP healthcare expenses were paid for with pre-tax dollars, the firm notes.
Meanwhile, another recent survey by Alegeus finds that nearly half of respondents said that economic uncertainty will impact how much they plan to contribute into their consumer-directed healthcare (CDH) accounts. This is significant, the firm emphasizes, as COVID-19 had far less of an impact on CDH account contributions, where roughly three-quarters of respondents (74%) said they maintained the same investment choices before and during the pandemic.
This also presents an opportunity for employers to show their support through this time of economic uncertainty, the firm further emphasizes. “By providing education and resources that highlight the cost-saving potential of a tax-advantaged benefits account, employers can help guide their employees to make decisions that benefit them now and long into the future.”
The findings are based on an online survey among 1,018 U.S. respondents that was fielded from Jan. 13-16, 2023, by independent research firm Researchscape. The second survey cited was conducted in October 2022 among 1,175 consumers.
