Employees Turn to Health Savings Accounts to Manage Healthcare Costs
Gen-Zers are particularly receptive to health savings accounts, but many employees are seeing the value as healthcare costs continue to escalate.
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- Employees—particularly in younger generations—are investing in health savings accounts to manage their healthcare spending and find their employer-sponsored health plans are not enough to protect them from high costs or complicated care, according to a press release from Fidelity which reflects research that Fidelity has conducted in the last two years.
In light of rising healthcare costs, nearly six in ten Americans have attempted to lower their healthcare spending between 2021 and 2023.
More than a quarter of respondents chose not to save as much as they planned (26 percent). Almost a fifth of consumers indicated that they covered healthcare bills instead of other basic needs, like rent or car payments, and the same share of respondents borrowed money (18 percent). Meanwhile, 16 percent of consumers decided to forego healthcare services or filling a prescription.
Beyond these cost-cutting measures, more consumers have invested in health savings accounts. Fidelity reported a 27 percent increase in health savings accounts and a $2 billion increase in health savings account assets. The company’s number of funded health saving accounts grew to 2.8 million and the total assets in those accounts rose to $16 billion.
Additionally, nearly nine in ten Gen-Zers who have a high deductible health plan have opened a health savings account. Overall, 71 percent of eligible respondents have opened a health savings account.
Having a health savings account gives consumers more confidence as they head into retirement, Fidelity found. More respondents with health savings accounts said that they anticipated a comfortable retirement and felt able to cover retirement costs.
“Meeting the rising cost of health care continues to be a concern for Americans, particularly as inflation impacts household budgets,” said Begonya Klumb, head of health and benefit accounts at Fidelity. “We see time and again that savers with access to an HSA are able to use the triple-tax advantage to become better prepared for the cost of health care, both today and in the future.”
Aside from health savings accounts, employer-sponsored health plan benefits are another support for consumers as they battle rising healthcare costs. However, employees found their health plan benefits lacking, Fidelity research uncovered.
Over a third of employees strongly agreed that their employer-sponsored health plan benefits satisfied their households’ healthcare needs (35 percent). Additionally, 17 percent of employees reported that their employers offered tools to support care coordination between doctors.
“We know having the right health benefits strategy can help combat rising costs and drive employee engagement,” said Steve Betts, head of Fidelity Health. “It’s not simply about the benefits themselves, but how they all work together to help employees navigate their health benefits choices with confidence.”
These results reflect the same trends that the Employee Research Benefit Institute (EBRI) found: in 2021, the average health savings account balance grew from $2,645 in January 2021 to $3,902 by the end of the year. Employer contributions significantly impacted the average account balance, with the average account that received employer contributions ending the year with a balance of $4,352.
Despite employees’ less than full-throated support of employers’ benefits according to the Fidelity press release, 93 percent of employees in 2022 were satisfied with their employer-sponsored health plans overall, according to a poll from the Seven Letter Insight for the Protecting Americans’ Coverage Together (PACT) campaign. Most found that the quality was superior to open market plans and that employer-sponsored plans were more affordable.
