Just 51% of Americans believe they are knowledgeable about Health Savings Accounts (HSAs) according to a new joint report released March 13 by the LIMRA Secure Retirement Institute and Insured Retirement Institute (IRI).
The survey results indicate there is much to be done to educate consumers, advisors and employers to ensure the full benefits of HSAs are realized. The study surveyed consumers, financial advisors, asset managers, and employers to get a complete understanding of the HSA market and how this product is being used.
The survey found many Americans are unaware they can use their HSA assets – accumulated in their working years – to pay for health care and long-term care expenses in retirement. In fact, 2 in 5 Americans mistakenly believe that balances must be spent by the end of the year, or forfeited.
The growing costs of health care and long-term care have prompted many advisors to address these risks with their clients as they plan for retirement. Nine in 10 advisors surveyed say they typically discuss healthcare or long-term care with clients but only 7 in 10 have specifically addressed the use of an HSA. Those who do not discuss HSAs acknowledge they have insufficient expertise with HSAs. Nearly all advisors (96%) surveyed say they would like to learn more.
“Today, only a quarter of Americans plan to use HSA assets to fund future health care costs in retirement,” said Judy Zaiken, corporate vice president and project director, LIMRA Secure Retirement Institute. “The findings underscore a great opportunity for the industry to educate consumers and advisors on the value of using HSAs for tax-free asset growth and as a financial hedge against retirement health care costs, which is still an uncommon strategy.”
In response to the study’s findings, IRI President and CEO Cathy Weatherford said: “IRI values the opportunity to collaborate with LIMRA Secure Retirement Institute to examine this growing aspect of holistic retirement planning. As the onus of providing income during retirement is increasingly the responsibility of the individual, it is critical for the retirement income industry to drive consumer education on the value of participating in an HSA. While the need for more education is clear, it is encouraging to see the continued growth of HSAs over the past decade and the increasing number of employers offering and seeking avenues to offer these accounts in their benefit packages.”
The study found there were some groups of consumers that are more likely to be knowledgeable about HSAs than others:
- Wealthier households are more likely to be knowledgeable about HSAs. Among households with $100,000 or more in financial assets, 65% are knowledgeable as compared to just 40% of those with less wealth.
- Men are more likely than women to report being knowledgeable about HSAs (58% of men vs. 48% of women are somewhat or very familiar).
- Married workers report more HSA knowledge than do non-married workers (69% vs. 52%).
- Consumers with children report more HSA knowledge than those without children (55% vs. 44%).
The study examines 2017 survey results from of 2,141 Americans, weighted to represent the U.S. population; 132 active financial advisors; and 1,497 private employers with 10 or more employees.
About LIMRA Secure Retirement Institute: LIMRA Secure Retirement Institute provides comprehensive, unbiased research and education about all aspects within the retirement industry to improve retirement readiness and promote retirement security. For more information, please visit www.secureretirementinstitute.com.
About the Insured Retirement Institute: The Insured Retirement Institute (IRI) is the leading association for the retirement income industry. IRI proudly leads a national consumer coalition of more than 30 organizations, and is the only association that represents the entire supply chain of insured retirement strategies. IRI members are the major insurers, asset managers, broker-dealers/distributors, and 150,000 financial professionals. Learn more at www.irionline.org.