Health Savings Accounts: How Thin Can We Slice Our Payroll Deductions?

In the past 18 months, Ive had three medical emergencies with dependents. Between deductibles and coinsurance, I ended up tapping into my health savings account (HSA) . Sure, a build-up of savings over time and growth via investment returns would have been great. But thats not going to cast a broken ankle or remove an appendix, is it?

High-deductible health plans and health savings accounts continue growing in popularity due to their lower monthly premiums and tax-preferred treatment. But right along with that rising popularity, deductibles and out-of-pocket spending, also, has increased for most individuals.

Turns out, people with HSAs just arent saving enough. In fact, according to EBRI, the average total employee and employer contributions combined were barely above the minimum allowable deductible for family coverage. And those contributions were less than half the allowable contribution maximum for family coverage.

Per the EBRI research, On average, account holders appear to be using HSAs as specialized checking accounts rather than investment accounts, and most participants are using them for basic expenses: deductibles, coinsurance and copayments.

And thats a shame. Think about it: HSAs offer a triple tax advantage. Theyre a great vehicle for putting money away for future medical expenses, including retiree medical expenses (most of us have already said goodbye to employer-provided retiree health care benefits!) Theyre a great tax-savings vehicle.

Its clear, though, that for those who have access to HSAs, its not an easy feat to save the maximum annual contribution. Consider: Depending on your income level and the plans design, deductibles and out-of-pocket expenses can be significant. In an analysis of higher plan deductibles by The Kaiser Family Foundation , it was shown that many people with insurance coverage do not have sufficient financial resources to pay a mid- or high-range deductible. Imagine if you didn't have insurance coverage? (Congress, are you listening?)

Its reasonable to assume that most individuals are going to dip into their HSAs to pay their current health bills. And lets not forget the other competing programs that individuals consider when deciding where they want their payroll deductions to flow.

For example, a minimum of 10% to 15% of pay is recommended for most individuals to contribute to their 401(k)s. Start adding retirement contributions plus HSA contributions, health premiums, other benefits premiums and other mandatory deductions or voluntary benefits, and that totals a big chunk of money!

As for me, while I would love to contribute the maximum to my HSA, its a battle for all of the reasons Ive listed. For those of you in a similar situation, take heart in knowing were not alone. Nearly four in 10 workers on employer-sponsored health plans are personally experiencing or know someone whos having financial difficulty due to medical bills, according to Securian Financial Group.

Even Millennials the generation thats still living with mom and dad because theyre holding off on buying their own home are struggling, with 52% who are enrolled in employer plans struggling or knowing someone whos struggling.

Tangentially, but still relevant as the current health-care debate continues, the GOPs health-care plan supports the expansion of HSAs. While this is good news, even if such provisions move forward, that alone wont help people address their medical expenses, especially among many low- and middle-income workers.