Obstacles Thwart Many Americans' Use of Tax-Advantaged Spending and Savings Accounts;
WageWorks' Survey Finds Lack of Guidance Prevents Acceptance Despite Spiraling Healthcare Costs
SAN MATEO, Calif.--(AllPayNews)--May 31, 2006--Consumer adoption of Health Savings Accounts ("HSAs") and other tax-advantaged healthcare accounts intended to help consumers save remains low according to a new survey sponsored by WageWorks. The survey also finds that most Americans find it harder to budget for health care than other types of expenses. These findings challenge current thinking among policy makers and some employers that simply offering HSAs will solve the healthcare crisis.
Consumers Seeking Relevant and Independent Information
Conducted on behalf of WageWorks(R), the leading provider of consumer-driven tax-advantaged health care spending and savings accounts, the national survey of adult Americans found that a majority (61 percent) have more difficulty budgeting and planning for health care expenses than for other types of expenses, such as retirement. By the same percentage, survey participants indicated the need for better, clearer information specific to their situation. Another 27 percent of respondents wanted hands-on-help from experts or tools for ongoing management of healthcare expenses.
"For retirement planning, consumers have access to clear, relevant, independent information. That hasn't happened yet in health care," said Jon Kessler, Chairman of WageWorks. "Despite the many tools and initiatives rolled out by health plans, most Americans still feel unprepared to manage their own health care costs and don't necessarily trust health insurance companies to guide them."
Consumer Acceptance of HSAs Remains Low
The survey found that more than half of Americans (57 percent) are likely to set aside their own money for out-of-pocket healthcare expenses. However, only 1 in 5 will use a tax-advantaged spending or savings account such as an HSA or Flexible Spending Account ("FSA"). These accounts allow consumers to save up to 40 percent on medical costs, and in the case of HSAs, invest unused funds tax-free.
Even among those who have enrolled in high deductible health plans, most aren't opening HSAs. At the beginning of this year, there were 3.2 million high deductible plan members(1), according to Americas Health Insurance Plans, a trade organization. This figure is widely quoted by promoters of HSAs. However, only about 820,000 (26 percent) have opened an HSA(2) according to the most recent data from Inside Consumer Directed Care.
"If you're not in a 401(k) or IRA you're probably not planning effectively for retirement. The same is true in healthcare," said Kessler. "One way to increase acceptance is to encourage individuals to seek out the planning resources that are available." WageWorks' Web site, www.wageworks.com, has account qualification tests to determine which account fits individual needs, calculators to estimate savings, and other planning and educational tools.
A Barometer of Healthcare Consumerism
Employee participation in FSAs and HSAs is particularly critical for employers who are hoping consumerism will soften healthcare's impact on the bottom line. "Employers who focus on getting workers into tax-advantaged healthcare accounts are seeing better results from these accounts and from their overall cost containment strategy," according to Kessler. WageWorks has more than 2,000 clients who provide one or more of these accounts, including more than 100 of Fortune magazine's Fortune 500. The number of employers who offer these accounts has grown steadily in recent years.
"With all of the excitement about these accounts, it's easy to forget that consumer uptake is the ultimate barometer," said Kessler. "For example, politicians and industry advocates routinely cite the growth in 'HSA-compatible' health plans, but rarely talk about the fact that most participants haven't even opened an HSA."
"Making consumers more financially accountable for their healthcare decisions is clearly a promising model for rationalizing healthcare costs, but it must come with a strategy and clear metrics for consumer acceptance of this new accountability," Kessler continued. He recommends that employers establish annual quantitative goals for growth in the number of employees enrolled in HSAs and FSAs and the total volume of dollars contributed, as well as specific steps taken to meet those goals. "There are many ways to boost employee interest, from new technologies such as debit cards to old fashioned great customer service. If it can be measured, it can be managed and improved," Kessler concluded.
On behalf of WageWorks, StrategyOne conducted a nationwide telephone omnibus study of 1,044 Americans 18 years of age and older regarding their perceptions and experiences with health care expenses. The interviews were conducted via telephone from April 13-18, 2006 utilizing the global field services of Opinion Research Corporation (ORC). A Computer Assisted Telephone Interviewing (CATI) facility and Random Digit Dialing (RDD) technology were used. The data were analyzed by StrategyOne. The margin of error for the total unweighted sample of 1,044 is +/-3.1% at the 95% level of confidence.
WageWorks is the leader in consumer health spending management. The Company works directly with companies and consumers, as well as with leading financial institutions, health plans and health providers to enable widespread participation in tax-advantaged spending and savings accounts. Today, WageWorks' solutions span all key health spending accounts, such as FSA, HSA and HRA, as well as highly-valued employee benefits such as transit and parking programs, dependent care, tuition assistance, adoption reimbursement, COBRA and more. Leading employers such as Bank of America, Bank of New York, Ernst & Young, LLP, Limited Brands, Pfizer Inc., Pitney Bowes, the State of New York, Tribune Company, Union Pacific Corporation and United States Postal Service have sought out WageWorks to provide spending account solutions for their employees. In October, WageWorks was named to the 2005 Inc. 500 list of the nation's fastest growing private companies. WageWorks is headquartered in San Mateo, California, with offices in Chicago, Mequon, WI, New York, Phoenix, Troy, Michigan and Washington D.C. For more information, please visit the web site at www.wageworks.com, email WageWorks at firstname.lastname@example.org or call 866-602-3887.
(1)BenefitNews.Com. 09 May 2006. Employee Benefit News. 30 May 2006 http://www.benefitnews.com/detail.cfm?id=8770.
(2)"AHIP Center for Policy and Research." www.ahipresearch.org. 01 Jan. 2006. America's Health Insurance Plans. 30 May 2006 http://www.ahipresearch.org/pdfs/HSAHDHPReportJanuary2006.pdf.
Michael Altfest, 415-486-3244