Employees say they have a good understanding of health saving accounts, HSAs, but do they really?
Bank of America took a look and discovered participants might not be as up-to-speed as they think.
For employees enrolled in a qualified HDHP—a health insurance policy with higher deductibles, but lower premiums—an HSA may be a powerful tool to help save for and manage healthcare expenses with the added benefit of being able to save additional funds in an HSA to cover healthcare costs in retirement,” the company notes.
Employees are not only using their HSAs it adds, but a majority also say they have a good understanding of how their HSA works.
However, a deeper analysis shows that a full understanding of the benefits are lacking.
By the numbers
The 2019 Bank of America Workplace Benefits Report found that:
- 57% of employees say they have a good understanding of HSAs
- Only 11% of employees were able to correctly identify four basic attributes of HSAs
- Offers a “triple” tax advantage
- Funds in the account can be invested
- Funds in the account do not expire
- Requires enrollment in an HDHP
Even more worrisome is that the employers’ understanding is lacking as well:
- 65% of employers say they have a good understanding of HSAs
- Only 7% of employers were able to correctly identify their four basic attributes
HSA business trends
- Millennials are the greatest users at (37%), followed by Gen Xers (36%) and Baby Boomers (26%). Over the last four years, we saw the greatest growth in health savings account usage among Millennials, with a 40% increase in the number of accounts held by this generation.
- Over the last four years, BofA average balances in HSAs have increased more than 40%, up from approximately $2,300 in 2015 to around $3,250 in 2019.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
