Marti: “A data point that stuck out to me was that survey respondents, when asked if they tend to save or spend their HSA balance, roughly 82% indicate that they spend their balance, whereas about 18% indicate that they save their funds.
Now clearly with individual health care there is a fundamental lack of health care literacy and understanding often times, and likewise there are countless variables that influence one’s ability to save or invest in their own health care. So, with all that being said and all that being on the table, how much true choice do people have when it comes to being a spender, or a saver, from your perspective?”
A: “Gosh, that’s such an interesting question because obviously your health status factors in to whether you could be a spender or a saver.
Some people of course have drastically different health care needs and need all of their account funds to cover their health care and their family health care.
And I also want to back up and say there is no negative stigma to being an HSA spender; it’s just how you approach using that account.
So, clearly, it’s going to differ. There’s going to be a certain population that is going to need to use their HSA to cover their health care expenses and really that’s what it is there for – it’s to help people cover their expenses.
However, for many Americans, you may be able to make choices that move you into the saver column. For example, you could pay for some out-of-pocket expenses using your personal funds instead of using your HSA and, therefore, you’re preserving that HSA balance.
And then you can also make sure you are always making financially smart health care choices, like asking for generic over brand name prescriptions, and that will also help you preserve your HSA funds.
So, there’s little things you can do to help nudge yourself to that saver column.”
Zach: “So, I’m kind of interested in this area as well, but from a different point of view. With the rise of high deductible health plans, how do you see that affecting the saving versus spending balance of HSA accounts? It seems like to me it would tip it very much into the spending side of things as high deductibles demand higher co-pays and blowing out your savings essentially.”
A: “Yeah, you would think that, but if you think about it from a long-term perspective these accounts are meant to give you a long runway to build up your savings for when you need them for health care.
And remember with these qualified plans, all preventative health care is covered. You don’t have to tap into your account for any of your annual physicals or any of those types of expenses.
They’re truly designed to make sure that people are getting the health care that they need. We’ve also created a product that allows people to tap into their future contribution so when they have not built up a balance yet they are able to accelerate their funding from contributions that they have scheduled coming down the road.
For example, if my plan year starts in January and I have a zero balance because it’s the first time I’m on this type of plan, and I have to go to the dentist, let’s say, and I needed $300 — I can borrow ahead and use funds from future contributions and cover that $200 easily.
I don’t even have to do anything; it’s automatic in our system. And then as my contributions from my paycheck go back into the system, that balance restores itself. We call that HSA On Demand® and it’s a really great feature for helping employees make sure they have the money they need for that care.”
M: “That definitely takes a little bit of the pressure and the stress off of the management of one’s health care expenses. And going a little bit off script here, how much of the onus do you all see in terms of getting the word out for all these tools that you all have to offer. Is it more on yourselves in terms of ConnectYourCare or more on the employer?”
A: “Yeah, so we forge really tight partnerships with our employer groups because every employee population is different; so we find for our messaging to be affective, we need to get into the minds of that group and apply that unique twist to the messaging.
So, we have lots of great tools. We wrote FSAs For Dummies and HSAs For Dummies, and we have them out there as a resource.
But then when we are working with our employers to really drive the needle and drive that education, we create those customized communications that really do need to be adjusted to meet that unique population’s need.
Each employee population has been on a different benefits journey depending upon what types of benefits the employer has offered over the years, so that might be one element we take into account as we roll out the messaging.
And people really trust their employer; they trust their employer to make decisions that are right for them, and we find that benefits teams take the employee experience into consideration wholeheartedly when they’re picking out a vendor or when they’re putting together communications.
They really want to make choices that are best for the employee. So that tight partnership that we have with employers to make sure that messaging is targeted really does help make sure that we have more effective communications.”
M: “I guess building off of something you mentioned earlier, which was the trends with Millennials (and obviously you’re going to have different trends with different population subsets), your report indicated that Millennials entering the labor force are consuming information and making decisions more based on advice from friends, family, or financial advisors. Knowing this presents an opportunity to address the population preemptively, how do you see that you and your company can make a direct impact with this specific population that’s only going to be growing as the years go by?”
A: “What we’ve found is that Millennials do want to do the right thing when it comes to money — saving their money and making the right decisions around their money — and they are actually very likely to react to advice that they’re provided.
They just need to have it delivered in a way that works for them. So, mobile delivery, videos, and that advice from family or friends is the best way to move the dial.
One thing I think that is interesting about this population is they’re most likely to label themselves as a saver, but they’re also least likely to rate themselves as knowledgeable about their accounts, and they are least likely to worry about how they’ll pay for health care and retirement.
So, it is important to get that message out to them to help them build that nest egg for the future. But it needs to be in digestible information presented in a way that’s going to resonate with them.”
Z: “Yeah, well I guess moving on the opposite end of the spectrum from the Millennials, thinking about the retiring population, what advice would you give to maybe those who are getting close to retirement to begin preparing and to make good decisions to prepare themselves to cover the health care costs and retirement?”
A: “Yeah, so Boomers actually have a great advantage. Those over 55 are able to put an additional thousand dollars into their HSA each year. So that gives you a little more flexibility to pad your account with that tax-free money prior to retirement; that’s a great advantage.
But, you know there’s a lot of scary numbers being tossed out there around how much you’ll need to save for retirement. So, I think that sitting down and figuring out what you’ll actually need in retirement, there’s a lot of calculators out there, but you can also sit down with your financial planner.
And making that plan is something that Boomers really need to take on to their task list and make sure that they do that sooner rather than later.
Many people think that Medicare is going to cover all of their costs and it can be a startling reality check when they find out they are going to have to dip into their retirement nest egg to cover health care. So, really, I recommend sitting down with a financial planner and ensuring you have a plan put together to cover the significant costs.”
Z: “Okay, I guess this may be difficult to distill down, but do you see one particular pitfall, or obstacle, that retirees face when planning for their health care later in life?”
A: “Yeah, I think health care in general can just be confusing, right? You don’t know how much something is going to cost. We spend a lot of time researching our next car, researching our next TV; all of those costs are very visible and easy to compare as a consumer.
Health care isn’t that easy. You could spend hours calling around to find your cheapest doctor, but you’re probably not going to want to go make that your final decision.
I really think the transparency in cost is something that is a little bit of a challenge when people come to planning for retirement.
But than there’s also just that question mark out there. It’s not something easy to plan when you’re thinking about the contingencies and what could happen.
And of course, you know trying to estimate how long we’re going to need to cover our health care and when it will run out… there’s a lot of variables in the mix.”