Consumer-Driven’s More of a Given

Employers are embracing consumer-driven health plans in record numbers as they look for ways to manage costs, yet a recent study indicates that most employees don’t fully understand how to use them.

The plans are normally paired with a health savings account that offers tax advantages and earns interest. And unlike flexible spending accounts, HSAs don’t expire. Yet only 30 percent of enrollees surveyed by Alegeus Technologies, which administers these accounts, passed a basic proficiency quiz, and more than 40 percent “still view HSAs as spending accounts, exhibiting a lack of understanding of the ability to save beyond the plan year or invest HSA funds,” according to the 2014 Consumer and EmployerHealthcare Benefits Survey.

The only way that both employers and employees can reap the benefits of tax-advantaged accounts is through more education on how to use these plans, said William Short, board chairman for the Employers Council on Flexible Compensation, a nonprofit advocacy group for tax-advantaged benefit programs.

“A huge benefit for the employee is having cash that grows on a tax-free basis, but that’s not an easy concept to convey because these plans are so different and new,” he said.

One way to clarify matters is for employers to make a CDHP the sole benefit plan offered and educating workers “early and often” on how to use their health savings account properly he said.

Nearly 17.4 million Americans are covered by a high-deductible health plan linked to an HSA, according to a recent survey by America’s Health Insurance Plans, a trade group. The survey shows that enrollment in HSA plans has grown on average 15 percent annually since 2011.

Short said he expects those numbers to grow rapidly as consumers become more familiar with the benefits of tax-advantaged savings accounts.

Rita Pyrillis is a writer based in the Chicago area. To comment, email editors@workforce.com.