- HSAs affect health spending. New research from EBRI finds consumers who have health savings accounts use health care differently and spend differently on health services.
- Lack of access and understanding. Although this study indicates HSAs can be a valuable tool, some employers don’t offer HSAs, others don’t contribute to them, and some workers don’t use them when they are available.
- Build a communication plan. Employers should communicate HSA offerings and contribution structures to employees, in addition to clearly defining how the plans work and how using HSAs can set workers up to cover future medical costs.
Having access to a health insurance plan that is tied to a health savings account (HSA) may lead to more efficient health care spending, according to recent research from the Employee Benefit Research Institute (EBRI). Such results beg the question, “Why aren’t more employers offering them?”
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An EBRI report released in April sought to examine the differences in health service use and spending for enrollees in HSA-eligible plans, compared to individuals using preferred provider organization (PPO) plans with deductibles that are high enough to be HSA-eligible.
“The role of the health savings account is to encourage shopping around of sorts,” said M. Christopher Roebuck, president and CEO of RxEconomics, and co-author of the report. “It’s encouraging members to make more informed choices about the value and the care that they’re about to consume.”
The study found similar spending among HSA and PPO enrollees but different use of services based on health condition:
- Individuals with no health conditions using HSA plans were less likely to use more expensive services — emergency department visits, specialist visits and prescription drug fills — but had more primary care provider visits.
- HSA plan enrollees with two or more health conditions did not use fewer health services but rather had more in-patient hospital admissions and days spent in the hospital, as well as more primary care office visits. The report notes that more research is needed to determine if the increase in hospital admissions for this group indicates they are not accessing needed services.
“Does this [HSA] account create a savings mentality or a spending mentality?” said Paul Fronstin, director of health benefits research at EBRI and the report’s co-author, regarding the question the study sought to answer. “If I’m sitting there with this account, and I have $2,000 in it, do I really want to spend the $2,000 on this hospital visit or the emergency room, or would I rather keep it in the bank and have it when I really need it, and call my primary care doctor tomorrow?”
Making Health Care More Affordable
HSAs are the only type of savings vehicle offering triple tax advantages. However, two decades after the accounts were first introduced, Fronstin estimated fewer than one-third of people use them.
EBRI’s findings — that HSA plan enrollees used more affordable care options, individuals with no health conditions spent less and those with health conditions spent more, indicating a proportionate use of services by those who needed them most — are useful for employers looking to offer competitive benefits, Fronstin said.
The gap between HSA plan and PPO deductibles is closing, making HSA plans a more attractive choice, Roebuck said. Still, some employers continue to offer higher-deductible PPOs, or HSA-eligible plans without the addition of an HSA.
“A lot of employers that have already gone to a high-deductible PPO made the decision that the high deductible was appropriate,” Fronstin said. “Why didn’t they make the decision that an HSA was appropriate, too? Health care is less affordable as a result.”
Explore HSA Contributions — and Communicate with Employees
Even when given access to HSA-eligible accounts — 78% of employees surveyed in WorldatWork’s 2022 Inventory of Total Rewards Programs and Practices offered HSA accounts among their benefits — some workers enroll in those plans but never open an HSA.
“Choices are good, but there’s choice fatigue,” Domaszewicz said. “People are asked to be good stewards, to shop for care, to manage their HSA. It helps to have support, tools, education and an advocate to help along the way, instead of just saying, ‘Here are your choices; good luck.’”
Fronstin and Domaszewicz recommended that total rewards professionals communicate the following to workers:
- How premium savings from switching from a PPO to an HSA-eligible plan can be contributed to the account, which can help cover the annual deductible
- The accounts’ tax benefits and contribution limits, and how they can be used to invest and save for future medical expenses
- Health benefits included in the plan.
Past EBRI research found some consumers on HSA plans reduced their use of services that were free under their plan, such as cancer screenings. “There was a messaging issue,” Roebuck said. “People didn’t understand how these plans worked and what was covered.”
Domaszewicz advised total rewards professionals to provide a way for workers to compare different plan types and account for factors such as premium and deductible cost, use of an HSA, number of family members, health conditions and potential health scenarios.
“More and more benefits are starting to be employee-paid — either the employee pays all of it or the employee has a meaningful cost-sharing — as opposed to the employer just paying everything,” he said. “It’s more important to give employees some way to compare and contrast options and make good decisions around those things for their financial, physical and emotional well-being.”
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