Most Americans have no clue how high health care costs soar later in life

Almost one in seven Americans have absolutely no plan for their future financial and health care needs, new research suggests.

A recent study of 2,000 employed Americans found that only 26% have a one-to-four-year plan in place.

And even with many believing they’d factored health care costs into their future plans, seven in 10 respondents grossly underestimated the amount of money they think the average retirement-aged couple needs for health expenses.

For long-term financial goals, three in five are using a 401(k)/retirement account and 31% are leveraging a health savings account.

But despite that, nearly three-quarters of Americans admitted they had no clue how 401(k)s, health insurance or HSAs worked when they got their first job.

Conducted by OnePoll on behalf of Bend Financial, the study also discovered that nearly 40% of respondents weren’t well-informed about health benefits at their first professional job and were left to do their own research instead.

Moreover, more than half felt overwhelmed by the mountain of paperwork surrounding their benefit options.

More than three in five have also felt stuck in a job, but not always for obvious reasons. While nearly half feared they wouldn’t be able to find a similar or better salary, 41% were afraid of losing their benefits — much more than those who feared their skills weren’t transferable (22%).

Respondents noted a number of changes that could have been made to improve the role they felt stuck in. While a better salary was key for 64%, half said they’d prefer better health benefits — more than those who mentioned a better work/life balance (46%) and tuition assistance (25%).

But while an increased salary and better health benefits stand out as driving forces behind improved job satisfaction, confusion surrounding benefits still looms, with more than half feeling like they’re flooded with information about them, to the point where it's overwhelming.

That may be why 73% wish they’d learned about HSAs and how health insurance works before they entered the workforce.

“Selecting benefits and understanding how HDHPs and HSAs work are the last things that should be stressful about anyone’s job,” said Bend Financial co-founder and CEO Tom Torre. “Yet our study shows people often feel bombarded with information surrounding benefits, which can add to their stress and lead to choosing options that might not be the best fit for them on either a short or long term basis.”

To better understand health benefits, most respondents consulted their parents (43%) and co-workers (42%), while only 31% reached out to HR representatives.

Respondents also shared various knowledge gaps regarding their health benefits. Of the 871 who knew what an HDHP and HSA are, more than one in five incorrectly stated that HSAs don’t stay with you if you lose your job/insurance coverage.

And of those currently utilizing an HSA, 62% cited lack of HSA information and knowledge as the biggest challenge they faced when opening and beginning to use their account.

“Forty-six percent of respondents who were offered an HDHP/HSA option chose to stick with a traditional health plan because they didn’t receive enough information on what HDHPs and HSAs are and how they work,” Torre added. “With employees continuing to shoulder more of the costs surrounding their health care, employers and HSA providers need to work together to provide clear, comprehensive educational tools and resources to help employees feel confident in making the best benefit choices.”

TOP FIVE REASONS EMPLOYEES GET STUCK IN JOBS

• “I feared I wouldn't be able to find a similar or better salary” - 49%
• “I felt too comfortable in my job” - 47%
• “I felt intimidated by the job market” - 45%
• “I was afraid of losing my benefits” - 41%
• “I feared my skills weren't transferable” - 22%

WHAT DO EMPLOYEES WANT TO KEEP FROM FEELING STUCK?

• Increased salary - 64%
• Better health benefits - 50%
• Better work/life balance - 46%
• Better employer HSA/401(k)/403(b) contribution - 41%
• Tuition assistance - 25%