Many employers offer a variety of health plan options including high-deductible health plans (HDHP) coupled with health savings accounts (HSAs) that employers as well as employees can contribute to. While employees are not required to have an HSA to accompany their HDHP, it can be an excellent way to save for future healthcare costs.

Recent research by the Employee Benefits Research Institute (EBRI) shows that in the U.S. there are about 25 million open HSA accounts, most only open since 2015. Because there are individual and family HSA contribution caps, most accounts haven’t had time to build up to the point where those balances would cover the health plan deductible. The question remains whether, as the HSAs are maximized, they would counter-act the drop in healthcare usage generally seen with HDHPs.

Claims data show some trends in HSA usage; account balances appear to increase over time for the majority of accounts, and individual contributions tend to increase year over year. Of note, to answer the question of whether saving would increase spending, trends show that as HSA balances increase, employees are more likely to spend on health care services, particularly on primary care, imaging, and outpatient visits.

Employers, Employees, and Healthcare Spending

Driving the cause of these changing spending patterns is an increased ability to afford the care, greater need with age, or that consumers become less concerned about healthcare spending when they know they have the resources to cover the costs. Employers who contribute to HSAs on their employees’ behalf need not be as concerned that employees are delaying necessary healthcare until they can afford it.

Employers struggle between wanting people to engage in their healthcare benefits, decisions, and spending, while at the same time wanting employees to be mindful of their spending to ensure they don’t overuse services simply because the money and resources are available. One way to introduce the HSA to employees is as being similar to a 401(k) – savings are available as needed, but dollars have the greatest impact when compounded over time and used for healthcare costs in retirement. Employees can choose to invest HSA funds, and interest earnings are tax-free.