Getting a handle on health savings accounts
Despite growing publicity, most American workers have neither heard of health savings accounts (HSAs) nor understand how they work, according to a new survey by Watson Wyatt Worldwide.
HSAs—created by the Medicare Reform and Drug Benefit bill and signed into law last December—allow workers to contribute pretax dollars to an account to pay for out-of-pocket medical expenses. The accounts work in conjunction with a high-deductible health plan. Funds contributed into the HSA can be invested, and workers can roll over the account funds when they change jobs.
A survey by Watson Wyatt Worldwide of nearly 1,000 individuals with health insurance found that only 29% have heard of HSAs. Even among those who have heard of the plans, only 33% completely or mostly understand how they work, while another 34% somewhat understand these plans. The rest—and these are workers who have heard of the programs—either have no understanding or aren't sure.
After receiving an explanation of how HSAs work, individuals generally responded favorably to certain HSA features. Sixty percent of participants think having control of HSA funds, even after they leave their current employer, would be an extremely important benefit. However, respondents were concerned about other HSA features, especially relating to out-of-pocket costs. This month's Know How is designed to help you introduce these programs to your workforce, whether or not you have decided to adopt them. We are sure to hear more about them in the months ahead. As always, we look forward to your feedback.