More consumer education needed on HSAs

By NEW YORK — A key roadblock to health savings account acceptance is that many people know little or nothing about HSAs and their required high-deductible health insurance plans, according to industry experts.
The main culprit behind the learning inertia is the experience of many Americans over the past 20-plus years, during which they have become “disengaged” from their own health-care decisions, said Jerry Ripperger, director of consumer health for Principal Financial Group Inc. in Des Moines, Iowa.
Participating in a health maintenance organization, “people had to decide only whether to go to their primary-care physician or a specialist,” he said. With consumer-directed plans, they suddenly have to make myriad other decisions about providers, price and quality of care, Mr. Ripperger noted.
A quarter of U.S. adults — and more than a third in the 18-to-34 age group — “don’t know” or “know little” about HSAs, according to a report released last month by Mintel Group in Chicago.
“It’s hard to get young people to think about health care — they be-lieve they’re invincible,” said Terry Hunter, chief executive of Connect-YourCare, a health-care account ad-ministration firm in Hunt Valley, Md.
But HSA ignorance may be bliss, according to an April study by Cambridge (Mass.) Health Alliance, an affiliated hospital of Boston-based Harvard Medical School (InvestmentNews, April 16). Cambridge — as well as anti-high-deductible consumer groups — say that the plans discriminate against women and cause people to neglect their health to minimize out-of-pocket costs.
“Consumers are still uneducated about HSAs and their benefits,” said Susan Menke, a senior financial analyst for Mintel. The industry’s “direct to consumer” marketing and employers’ dissemination of information to workers are inadequate, according to the report.
Part of the problem is that HSAs aren’t in the comfort zone of many insurers and banks.
Insurers know health care but aren’t good at consumer education, while banks are good at consumer education but don’t know health care, said Kirsten Trusko, banking senior manager for BearingPoint Inc., a management and technology consulting firm in McLean, Va.
But insurers, banks and other companies in the HSA chain are determined to get the word out.
“We’re redesigning our marketing materials and looking carefully at media and presentation options,” said Dennis Triplett, president of health-care services for UMB Financial Corp., a bank holding company in Kansas City, Mo. Flashcasts and podcasts will be used to reach out to consumers who are more comfortable with those information delivery methods, he added.
The bank uses separate “business to business” presentations to convince employers to offer HSAs and high-deductible plans, and employees to sign up, Mr. Triplett noted.
Principal has presentations geared to educating brokers and agents, who in turn educate clients, Mr. Ripperger said. The insurer, a major provider of retirement benefits, also conducts training on employer premises to show employees the benefits of HSAs and high deductibles.
Before employees buy in to HSAs, “skepticism and distrust” have to be overcome, said Vik Kashyap, chairman of Canopy Financial, a San Francisco firm that manages HSAs.
They often are intimidated by the high deductible and don’t realize that it usually is waived for preventive care, Mr. Kashyap added.
For employees and clients who don’t need the HSA to pay medical costs, an effective strategy is to emphasize the accounts’ savings and tax advantages, he said. Contributions, investment earnings and eligible expenses paid from HSAs are tax-exempt, Mr. Kashyap noted.
Employers can get employees’ attention by “seeding” the accounts with startup money to help offset some of the initial deductible expenses, Ms. Trusko said. The average “seed” is about $1,200, but it varies widely, she noted.
Financial advisers also must take on HSA education responsibilities, as about 30% of client retirement savings will go toward health care, Ms. Trusko said.
Advisers should discuss HSAs with clients in the same conversations where they discuss the likes of individual retirement accounts and 401(k) plans, Mr. Hunter said.
Lower premiums, and the tax savings, make the HSA “a financial no-brainer,” said Regan Turner, a certified financial planner with Professional Financial Specialists Inc. in Boulder, Colo.