Benefits January 11, 2005

Survey: Workers Aren't Wild about HSA Out-of-Pocket Costs

January 11, 2005 (PLANSPONSOR.com) - The bad news is that most workers in a recent poll were clueless about health savings accounts (HSAs) while the better news is that, when briefed on the accounts, workers liked having more control over their funds.
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However, according to the Watson Wyatt Worldwide survey, that interest in HSAs is tempered by a distinct lack of enthusiasm for the risk of higher prescription drug payments and deductibles the accounts bring with them.

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A Watson Wyatt news release said the survey of nearly 1,000 health insured workers found that 29% have heard of HSAs. Six of 10 (61%) have not and one in 10 aren’t sure either way. Of those with some HSA knowledge, a third (33%) completely or mostly understand how they work while another 34% somewhat understand these plans, while the remaining survey participants have no understanding or aren’t sure.

“It’s not surprising that many individuals haven’t yet heard of HSAs,” said Ted Chien, Watson Wyatt global director of group and health care consulting, in the news release “But the plans are likely to gain momentum this year, especially since they offer both employers and employees some hope to slow rising health care costs.”

Participant understanding varies greatly by income. Those with higher incomes are more likely to know about HSAs. A scant 14% of respondents who earn less than $35,000 have ever heard of HSAs, compared with 41% who earn more than $75,000.

After receiving an explanation of how HSAs work, individuals 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 while more than half (55%) lower premiums are also an important benefit.

But what did get workers’ blood pressure up were some of the HSA features especially relating to out-of-pocket costs. Two-thirds (66%) find having to pay the full price of prescription drugs before meeting the high deductible extremely not to their liking and 57% expressed similar opinions about paying higher deductibles in general. When asked to identify the most influential factor to consider when deciding to enroll in an HSA, more respondents (36%) cited “maximum out-of-pocket costs” than anything else.

Many individuals favor paying higher deductibles in exchange for lower health care premiums, but within certain limits. Just over half (52%) would be interested in a plan that has somewhat low premiums and a somewhat high deductible and only 9% would like a plan with very low premiums and a very high deductible.

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