Consumers see the logic of pairing flexible savings accounts with prepaid cards that enable healthcare providers to gain payment from consumers' FSA balances right after services are rendered.
A survey of consumers late last year, conducted for the Network Branded Prepaid Card Association, indicated that consumers would be more satisfied with their FSAs if they could use the prepaid cards.
However, the survey also indicated that only about one in eight of its respondents had an FSA, and that the idea of employers offering or consumers using such prepaid cards is relatively new.
The survey was commissioned by NBPCA, a not-for-profit trade association with 32 members, including all four of the major credit card issuing companies. The survey, conducted by an independent research company that contacted about 400 consumers to ask their views on how the cards could help resolve nagging healthcare concerns.
FSAs are tax-advantaged savings accounts that consumers can use to pay medical bills. They are offered by employers, who also receive benefits from setting up FSAs. Consumers set aside pre-tax money in the accounts and then use the savings to pay medical bills. Typically, consumers pay the bills first and then are reimbursed from their FSAs.
Most consumers are primarily worried about the high cost of healthcare, but respondents pointed out other concerns that are tangentially related to FSAs, such as ensuring they're paying the right amount for expenses and deductibles; ensuring they're paid the right amount from insurance; managing complex benefits and insurance plans; having to submit receipts and deal with paperwork to be reimbursed; and waiting a long time for reimbursement.
The survey indicated that only 12 percent of respondents had an FSA, and another 57 percent of them had heard of the accounts but didn't have one. Still, most in the industry predict significant growth in FSAs as consumers move to high-deductible, consumer-directed healthcare plans.
About 80 percent of those with FSAs said the reimbursement process is cumbersome, and nearly 90 percent said prepaid cards would be useful in facilitating the reimbursement process, the survey indicated.
"Prepaid cards address every one of the major challenges that consumers mentioned," said Marilyn Bochicchio, president and executive director of the NBPCA.
Because fewer than 50 respondents had FSAs in the survey, the research company, Kupersmit Research, cautioned against reading too much into the results, but noted that respondents who heard the description of prepaid cards were motivated to find out more about them and their potential use with their FSA plans.
"These responses about frustration around the process suggests that there is a fertile landscape out there where consumers are going to look for tools that give them control," said Benjamin Kupersmit.
The survey results also indicated that the trade group has a lot of educating to do. Some 19 percent have never heard of such prepaid cards, and 42 percent said that while they knew of them, they had never used one.
"We need to educate benefits managers, human resources managers and consumers to better understand how health care prepaid cards can work for them," Bochicchio said.
The cards might gain wider acceptance if they can be merged with the payer identification cards that consumers are used to carrying, said Kirsten Trusko, senior manager at BearingPoint and co-leader of the financial services CDH practice.