Spending Account Safety Net
Health Savings Accounts (HSAs) come with a triple tax benefit: Contributions are tax-deductible, earnings are tax-free, and withdrawals are untaxed as long as they are used to cover qualified medical expenses.
According to the Devenir 2020 Year-End HSA Market Statistics & Trends, there are more than 30 million HSAs, covering 63 million people, holding over $80 billion in funds. The study also found that HSAs are being used in every state in the U.S., with some states reporting nearly 77% of the privately insured population being covered by an HSA.
Despite the wide adoption of HSAs, certain populations are ineligible to use these savings accounts in many cases because they aren’t able to fund them. Leader’s Edge sat down with Scott Beck, chief revenue officer at Lane Health, to hear more about new credit and payment plans that can impact enrollment in high deductible health plans (HDHPs), policy solutions to decrease barriers to care, and opportunities for advisers to help employees both use and invest HSA funds.
For example, 52% of all the Advances¹ provided are used by individuals who elected $0 in contributions during open enrollment. And 81% of Advances¹ typically are requested by individuals who make less than $75,000 per year.
Plan comparison tools are a great opportunity to demonstrate to employees the value of enrolling in a high deductible plan. What’s cool about ours is that we incorporate the value of our unique solution into the financial model. Of course, there’s always a need for enhanced communications, helping employees understand the value of the high deductible health plan, and helping them overcome the trepidation from being exposed to a larger deductible.
Finally, we’ve all seen surveys and statistics showing how people are regularly delaying or foregoing necessary healthcare because they can’t afford to pay for it. When employees don’t have to worry about their finances, we’re confident that they will feel more comfortable accessing needed care and thus potentially avoiding much larger expenses and care issues down the road.
As we think about future opportunities for lending, we believe that having a line of credit¹ specifically for prescription drugs could be a huge benefit as well. Think about a pharmacy expense charge card, for example, offered by a PBM. In the end, we want to help employees afford their prescriptions and not have to question whether they’re going to be able to fill them.
In their current form, HSAs are valuable to those who can save and invest. They disenfranchise those who can only afford to make a modest contribution or none at all, as well as those who are living paycheck to paycheck. In that regard, much more needs to be done to increase awareness and participation in HSAs.
Additionally, increased education efforts and permanent regulatory relief are going to be critical to ensure more people have access to and can take advantage of HSAs in the future.
¹Advances issued by WebBank