PIggy bank with coins Employeeswho have saved enough in their HSA to meet their insurancedeductible are at risk of succumbing to a "money to burn" mindsetand spending on unnecessary health care. (Photo:Shutterstock)

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Employers have made a big push in recent years to encourageemployees to adopt high-deductible health plans (HDHP),incentivizing the switch with employer contributions to a healthsavings account (HSA). As of last year, according to data from theEmployee Benefits Research Institute, 46 percent of Americans withprivate health insurance were enrolled in a high-deductible healthplan (though not all have a corresponding HSA).

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As HSAs gain traction–and balances–new insights into consumerbehavior can be gleaned. In a recentwebinar, EBRI explored the results of its recent study on HSAaccount balances. There are currently an estimated 25 million HSAaccounts, 76 percent of which have been opened since 2015.

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"They haven't had a lot of time to build up a very largebalance, but they have enough time to build up a large enoughbalance to cover their deductible," says Paul Fronstin, director ofEBRI's Health Research and Education Program. "We've done lots ofwork on the impact of the health plan on use of services, but wehaven't looked at how account balances affect use of services.

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Related: 8 health savings account headaches — and theirsolutions

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"We know that deductibles have an impact on use of services,"Fronstin continued. "When deductibles go up, people use less healthcare. Over time, as people build up account balances, does thatcounteract the effect of the deductible?"

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For the majority of consumers, no. Healthy enrollees will haveno need to spend down their HSA and will consequently accumulatehigher balances, regardless of the deductible. Similarly, sickmembers will see higher utilization.

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Looking at claims data pulled from a large employer from 2013 to2016, some trends about HSA use began to emerge. Overall, accountbalances increased the longer the account had been opened. Inaddition, individual contributions increased a bit from year toyear, and the percent of people who invested their HSA balance hadgone up 13 to 14 percent.

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One interesting finding: the more money employees have in theirHSA account, the more likely they are to spend it. "It's not thatpeople are hoarding their money and not spending it. They'reincreasing their average distribution," Fronstin said. "At the sametime, we see that use of health care services is increasing overtime."

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For those employees who had more than $3,000 in their HSA, EBRIfound that spending increased on services such as imaging,emergency visits, outpatient and primary care. However, there wasno impact on hospital stays, prescription drug fills, blood testsor certain types of radiology.

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It's possible that employees are delaying care until they canafford it–a negative consequence of many HDHP plans–but analternative explanation could be that consumers are less discerningin their health care spending when they know they have enough savedup to cover the bills. Still another possibility: employees aresimply experiencing more health issues as they age.

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To combat the first possibility, Fronstin stressed theimportance of employer contributions to HSAs, to ensure theemployee is able to afford care when it's needed. But how canemployers discourage spending on unnecessary health care services?"To get people engaged in their health benefits, increasedeductibles," Fronstin suggested. "Create a gap between accountbalances and deductibles so that people aren't viewing the accountas 'I've got the money there, I might as well spend it.'"

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Another strategy is to get employees to stop thinking about thehealth care they need now and starting thinking morelong-term–particularly about their health care costs inretirement.

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"We often gloss over the long-term savings potential of theHSA," said webinar speaker Jennifer Benz, senior vice president ofSegal Benz. "Possibly one of the greatest mistakes we made asbenefits professionals is introducing HSAs as a version of an FSAinstead of a version of 401(k)."

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And, like a 401(k), employees should consider an investmentstrategy–once they've built up enough to cover their deductible."As we talk about HSA investing in particular, it can seem like anoverwhelming action," Benz cautioned. "Often, people will justforget to do it. You need to promote the benefits: Interestearnings are tax free, returns, automation… focus on things beingeasy and simple is key."

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HSA investing will depend in part on the HSA administrator, butemployers should also be aware of the message they craft and towhom they promote. "There are folks that don't have a high enoughbalance to invest and they're going to be frustrated that you keeptelling them to invest," Benz said.

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"Let's recognize that there's always going to be a segment ofthe population that cannot afford to contribute to the HSA,"Fronstin said. "The reality for these people is that they're stuckwith the HDHP and if they do use medical services, they have to payfor that somehow. The advantage of the account for them is not theability to invest but the ability to put money in and take themoney out when they need it."

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Emily Payne

Emily Payne is director, content analytics for ALM's Business & Finance Markets and former managing editor for BenefitsPRO. A Wisconsin native, she has spent the past decade writing and editing for various athletic and fitness publications. She holds an English degree and Business certificate from the University of Wisconsin.