Bank of America Merrill Lynch

The employee perspective on health care benefits

How do employees feel about their health care benefit plans? How do they use them? A recent study by WEX Health sought to answer these questions to inform strategies that can help educate and engage employees.

1 High-deductible health plan participants feel they make smarter health decisions. More than three-quarters (82%) of those who participate in high-deductible health plans (HDHPs) either somewhat or strongly agree that managing their health care spending accounts helps them make smarter health decisions. The primary reason they enrolled in health savings accounts (HSAs) was to save for future health care needs (36%) and to be able to cover current out-of-pocket and/or unexpected medical costs (29%).
2 Concerns about affording medical expenses today and in the future. Nearly two-thirds said they are somewhat or very worried about unexpected out-of-pocket costs of current health care needs or illnesses, and of those people, nearly half are also worried about the cost of health care in retirement. While a third of respondents with an HDHP would use their HSA to cover unexpected costs of more than $1,000, nearly 25% aren’t sure how they’d cover that expense, and 20% said they’d use their credit card to cover it.
3 Education on the benefits of HSAs is needed. Nearly half of respondents perceived 401(k) accounts as offering the most pre-tax savings advantages. Yet an HSA offers unique triple tax benefits: contributions are made with pre-tax dollars, earnings are not taxed, and any withdrawals for qualified medical expenses are also tax-free.* In addition, 54% were not aware that they could invest their HSA funds if the plan made investments available. And three-quarters said they see their HSA as a way to pay for health care expenses “this year,” suggesting that they may not be aware that funds can be carried over.
4 Employees need help to determine how much money to put aside. The biggest challenge cited when using a high-deductible health plan was having enough money set aside to cover deductibles, as well as figuring out how much money to put in the account overall. Consistent with the finding that HDHP participants feel they make smarter decisions, they want help finding the best deals on health care services.
5 Personalized online and mobile tools are best for education and engagement. Gaining insights into which tools and resources work best for different groups of employees can make a big difference in the effectiveness of education and engagement programs. Respondents indicated a preference for emails, text messages and online goal trackers as resources to help them make better health choices. And personalizing these resources can help deepen engagement and employees' confidence managing their benefits.
Talk with us about strategies we can implement to help your employees make the most of their benefits.

Source: 2018 WEX Health Clear Insights Report.

* About Triple Tax Advantages: Participants can receive tax-free distributions from their HSA to pay or be reimbursed for qualified medical expenses they incur after they establish the HSA. If they receive distributions for other reasons, the amount withdrawn will be subject to income tax and may be subject to an additional 20% tax. Any interest or earnings on the assets in the account are tax free. Participants may be able to claim a tax deduction for contributions made to the HSA. We recommend that applicants and employers contact qualified tax or legal counsel before establishing an HSA.

Neither Merrill Lynch nor any of its affiliates or financial advisors provide legal, tax or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.

The Bank of America HSA is provided by Bank of America, N.A. (BANA), Member FDIC. Mutual fund investment services for the BANA HSA are provided by Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S"), a registered broker-dealer, Member SIPC and a wholly owned subsidiary of Bank of America Corp. ("BofA Corp."). Investments in mutual funds are held in an omnibus account at MLPF&S in the name of BANA, for the benefit of all HSA account owners. Investment advisory services for the HSA are provided to BANA by Devenir Investment Advisors, LLC, a registered investment adviser. Devenir is not an affiliate of BofA Corp.