Three Steps to Increasing HSA Participation and ContributionsBy: Edna Dretzka
HSAs are not a new concept, but HSA enrollment hasn’t been increasing exponentially over time. Incidence of consumer driven health plans eligible for an HSA account has hovered between 13% – 15% since 2013, according to EBRI/Greenwald & Associates Consumer Engagement in Health Care Survey (Fronstin/Dretzka, 2018), although there is some evidence that this might be changing.
Why haven’t they gained in popularity faster? The answer might be in how they have been marketed and in who is best suited to lead consumers in the transition. Most marketing surrounding HSA accounts has been focused on keywords (triple tax savings, medical savings account, etc.) with little understanding of what the consumers using these products actually need and want. They have also been straddling a strange line, where health insurance meets financial services. They are complex financial products with a host of rules about who qualifies, when you contribute, and how much. There are fees, investment lineups, and interest rates to understand. The result has been confusion about what they are and who will benefit and who to go to for information, leading many individuals to opt out completely.
What can employers and trusted advisors do to improve understanding and participation in HSAs?
- Meet Consumers Where They Are – Half of consumers use their HSA accounts to pay for immediate or short-term health care expenses, and that number jumps to three-quarters when you look at individuals who feel financially insecure. For many people, the normal talk-track of tax savings and saving for the future simply doesn’t resonate because they are more worried about putting food on the table today than paying for healthcare in retirement. Messaging needs to be targeted to this audience and what keeps them up at night.
- Find the Right Messenger – While many consumers really aren’t ready to take advantage of the triple tax benefits, there are some that would benefit from greater support in planning for the future. Only one-quarter of consumers are using these accounts to benefit from lower taxes or saving for healthcare in retirement, and fewer than one in ten are using these funds to invest in mutual funds and stocks. Interestingly, nearly all of the individuals taking advantage of these benefits consider themselves to be financially secure. Who is best positioned to talk to them about the benefits of their HSA? A financial advisor? Their employer? Figuring out the right messenger could go a long way in gaining trust in and engagement with the product.
- Build a Consumer Ecosystem Early – Individuals in HSA-eligible plans have a shorter tenure with those plans, on average, than individuals in traditional (non-high deductible/HSA eligible) plans. It also takes them roughly three years to be as satisfied with their plans as their counterparts in traditional plans. During this period, it is critical for consumers to feel supported by an ecosystem that informs and successfully transitions them to this new, higher-risk coverage. As an employer or trusted advisor, you can create this ecosystem by providing additional education and potentially financial assistance during the initial, three-year transition period – targeted by demographic. A financial bridge can also be critical to adoption of and contributions to HSAs, especially for the most financially insecure consumers.
Bottom line: Take the time to look at your consumer segments, talk to them, and learn what keeps them up at night. Then tailor your product, support, and entire ecosystem accordingly.
Want to learn more? Join us in a discussion about consumerism in healthcare, with a special focus on HSAs, hosted by Paul Fronstin of EBRI.