HSA confusion persists

Health savings accounts can be a great tool for consumers to take control of their health care, but they will only be useful if people understand them.  

And understanding HSAs is a tall order, as evidenced by a survey from Fidelity Investments.

Two-thirds (65 percent) of some 1,800 respondents said they simply do not understand how an HSA works, despite the growing number of people who use them. Fidelity surveyed adults who hold the responsibility for making household health benefits decisions.

Many respondents expressed confusion between a health savings account and a flexible savings account, Fidelity found. The majority of respondents (73 percent) said an HSA is pretty much the same thing as a health FSA or were unsure, and the “use it or lose it” provision of FSAs was one of the most commonly misunderstood differences between the account types.  And, 69 percent of all respondents incorrectly felt they would lose unspent money in an HSA at the end of the year.

The widespread lack of awareness around HSAs may be causing consumers to “miss out on its short- and long-term savings opportunities,” Fidelity researchers said.

“With annual enrollment in workplace benefits approaching in the early fall, the time to educate employees who are offered HSAs on their features is now, prior to them making a year-long commitment that precludes them from taking advantage of the accounts’ many benefits,” Fidelity said in a news release Tuesday.

Employers can help with HSA education; the survey affirmed they are an “influential source” among HSA users.

Consumers need access to uncomplicated information on the accounts, said William Applegate, vice president of Fidelity Investments.

“Employers that offer HSAs should deliver employees easy-to-understand communications and intuitive decision support tools, along with onsite and online workshops that clearly explain how HSAs work and how employees can benefit,” he said.

Growth in HSA account openings continues at a brisk pace. According to investment consulting firm Devenir, health savings accounts have surged to an estimated $18.1 billion in assets representing more than 9.1 million accounts.

Industry experts expect HSA use to keep rapidly growing in the coming years.

According to Fidelity’s survey, financial considerations were the key driver for respondents who chose to open an HSA.

When asked the reasons behind their choice, 48 percent of respondents cited how HSAs allow account holders to carry over remaining funds year to year, 45 percent said lower premiums, 38 percent said the tax savings, and 25 percent said an HSA is “an attractive savings vehicle for their anticipated health care expenses in retirement.” 

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