Younger Gens Are More Likely Than Older to Understand Health Savings Accounts

Half of Americans don’t understand how health savings accounts, or HSAs, work, a study from LIMRA finds.

Younger consumers, Millennials and Gen Xers are more likely to express knowledge about HSAs than older generations. 59% of Millennials and 55% of Gen X consumers said they are somewhat or very knowledgeable about HSAs. While, only 44% of Baby Boomers and 28% of the Silent Generation said the feel the same way.

But, self-reported data doesn’t mean they actually are knowledgeable. Nearly half of people who said they are very knowledgeable on HSAs incorrectly believe an account owner is required to spend the entire HSA balance by the end of the year or risk losing it.

LIMRA researchers said 74% of HSA participants indicate that HSAs are part of their retirement strategy, but on average HSA account holders more often use their checking accounts to cover current expenses like deductible, coinsurances and copayments, rather than taking advantage of the tax preference by contributing the maximum allowed each year. To make matters worse, only 27% of HSA owners use HSA accounts to save for future health expenses.