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Today's Commentary
Sunday, February 25, 2018

ConnectYourCare’s 2018 report on consumer-driven health care account trends finds 44.9% of respondents chose to enroll in a health savings account (HSA) as a savings vehicle for future health care needs, over more immediate benefits like tax savings and lower premiums, up from 40.5% in its 2017 report.

The majority of HSA account holders are spenders, both by their self-evaluation and backed up by spending and balance data. However, 44% of account holders saved at least half of their contributions in 2017, which may indicate a future shift in saver/spender trends.

Twenty-two percent of respondents overall say that paying for health care in retirement is the health care issue that concerns them most. However, when segmented by age, this rises to the top issue causing concern for those ages 55 to 64 (37.4%) and those age 65 and older (30.9%). Those younger than 25 are most concerned about unanticipated health care expenses and those ages 25 to 54 are most concerned about increasing insurance premiums.

While paying for health care costs in retirement does not top the list of health care concerns overall, this financial burden holds prominence among employees’ concerns for the future when compared to lifestyle expenses. Among those surveyed, 68.7% are more concerned about paying for insurance premiums and other medical expenses than they are about paying for lifestyle items like vehicles and housing in retirement. This is up from 63% last year.

Leveraging HSA investments can have a dramatic impact on HSA growth. However, ConnectYourCare found most respondents are not investing their funds, and among those who are, 62.9% plan to withdraw funds from time to time for medical expenses rather than grow their funds for future health care needs in retirement (17.7%).

When determining how much to save in a tax-advantage medical spending account, including HSAs, flexible spending accounts (FSAs) and health reimbursement accounts (HRAs), 55.5% say it is most useful to review their previous spending habits, while 23.9% saying seeing potential savings/spending scenarios for someone like them is most useful, and only 8% cite seeking advice from friends, family members or financial advisers as most useful. 

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