How well do employees understand and engage with their health accounts?

We set out to assess how employees are using their health accounts (health savings accounts [HSAs] and flexible spending accounts [FSAs]) in order to gauge their understanding of how these accounts work and the degree to which they are maximizing their advantages.

Overall findings

The data provide some insights as to how employees are using and managing their health accounts:

1. Even the most financially literate employees struggle to understand the value of and differences between health accounts.
2. While encouraging long-term saving to HSAs is important, employers cannot lose sight of the fact that HSAs are largely used as a spending account by most employees.
3. Employees look to account providers for excellent customer service, enhanced decision support, personalized online tools and other services to help them better understand and use their health accounts.

Employees see medical costs as the biggest challenge in retirement, but struggle to prioritize health savings in the future

When it comes to retirement expenses, 82% of employees consider medical costs as their biggest challenge.

When it comes to current financial priorities, 25% of employees consider medical costs and saving into a health savings account as a top priority.

The majority of employees are not optimizing their health account contributions or savings accumulations.

Only 6% of employees are making the maximum contribution for family coverage.

Just 10% of employees are making the maximum contribution for employee-only coverage.

62% of employees who are not receiving matching contributions to their 401(k) still prioritize saving to their 401(k) plan over their HSA.

Roughly one-quarter (24%) of employees said they don’t have enough money to contribute to their HSA at this time.

The majority of employees (56%) have saved less than $5,000 in their HSA.

A majority of employees use their HSA as a spending account

65% of employees use their HSA funds for current health care needs, large and small.

27% of employees use the money only when necessary (for larger, more immediate health care expenses and save the rest).

8% of employees focus on saving their HSA funds for future health care expenses.

Even employees with high financial literacy use the money in their HSA to pay for current health care expenses and don’t save. 58% choose to use their HSA money for current health care expenses large and small.

59% of employees with no financial worries choose to use their HSA money for current health care expenses, rather than save for the future.

What can employers do to encourage greater participation and savings in health accounts?

1. Provide access to online tools that offer personalization and decision support.
• The majority of employees (69%) who did not enroll in an HSA say they chose not to enroll because they don’t see any benefits to an HSA, don’t understand what they are for or just didn’t take the time to understand.
• Only 15% of employees with high financial literacy choose to save their HSA money for the future.
2. Design plans that help encourage employees to save money in their accounts
• On average, employees contribute 10% more from their paycheck to their HSA each year when their employer seeds money to their HSA.
• 59% of employees would contribute more to their HSA if their employer provides a matching contribution.
3. Emphasize quality customer service in the account providers they engage.
• 44% of employees say quality customer service is the most important feature of an account provider.
4. Use a variety of strategies to engage different age groups within their workforce
• Baby Boomers prefer personalized account activity notifications and plan reminders that help them save time and money, and better manage their health savings.
• Generation X and Y prefer to use tools that help them compare prices of health services and products.

Summary of key findings

Our survey found that employees are tasked with navigating a complex set of choices when it comes to deciding where and how to allocate their savings. Even financially adept employees have trouble deciding where to save and how to spend.

Employers need to focus on creating better ways to engage employees in the benefits of their health accounts, as well as how they work, so that they can get maximum value from them now and in the future. This includes providing tools to help them make smart spending versus saving decisions.

About our study

From March to April 2018, Willis Towers Watson conducted a survey to gauge employees’ attitudes toward health savings accounts (HSAs) and flexible spending accounts (FSAs). We set out to learn their views on saving and spending, and how well they understand the uses and benefits of the health accounts offered by their employers. The survey targeted 2,155 employees from private sector companies in the Unites States.