As the costs of health care continue to rise, more companies have moved toward offering high-deductible health plans with higher out-of-pocket expenses, leaving employees to shoulder much of the costs.

But more employers also are offering health savings accounts (HSAs) to help employees manage their health-care expenses. According to Bank of America’s 2019 Workplace Benefits Report, 90% of employers that offer high-deductible health plans (HDHPs) also offer HSAs. And more than 75% of workers who are enrolled in an HDHP also are enrolled in an HSA.

But the problem is both employers and employees are not fully aware of the benefits of HSAs, the report said. 

The report noted that 65% of employers and 57% of employees indicated they have a good understanding of their HSAs, but when asked to identify attributes of the benefits, only 7% of employers and 11% of employees correctly identified the four attributes of HSAs, which have been around since December 2003, when President George W. Bush signed the Medicare Prescription Drug, Improvement, and Modernization Act.

HSAs, the report said, offer a triple tax advantage, meaning that pre-tax contributions, potential gains and withdrawals used for qualified medical expenses are exempt from federal and most state taxes. Any unused balance gets carried over, funds in the account can be invested and funds do not expire and can be passed on to a beneficiary upon death, the report said.

“It’s a really simple and powerful tool, which should be the building block of a retirement plan,” Lisa Margeson, head of retirement client experience of Bank of America, said. People are still learning about HSAs, but it will take employers and advisors to fully understand them so that they can educate workers and clients, she said. 

Margeson said more people and employers are talking about overall wellness and a lot of it has to with costs, as evidenced by the report’s findings that the number of financial programs offered by companies has reached 53%, twice as many as four years ago. The growth of such programs provides the opportunity to make HSAs part of the conversation, she said. 

“There is a lot of talk about people living longer, Medicare only paying a certain amount of the cost, and individuals are being asked to cover a lot of the cost on their own,” Margeson said. “So that should elevate the dialogue. People need to make this a part of their future.”
 

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