One-third of employees don't understand preventive care coverage. Do yours?

Key takeaways: Preventive care, now commonly referred to as “proactive care,” can help employees catch health concerns earlier, avoid higher costs later, and make better use of the benefits they already have. But new HealthEquity research suggests many people still do not understand how billing for preventive care coverage works.¹

• Cost concerns are causing many healthcare consumers to skip or delay needed care, which can lead to worsening symptoms, delayed diagnoses, and more expensive treatment later.
• Yet, only 63% of employees knew preventive care visits were covered at 100% by their insurance, according to HealthEquity’s Healthcare Affordability Pulse.
• Benefits leaders can close the knowledge gap with clearer education, preventive care reminders, incentives, and Health Savings Account (HSA) contributions that build financial confidence.

Employees misunderstand preventive care and HSAs.

As a physician, I have seen how early detection can change the course of a person’s health. As founder of HealthEquity, I have also seen how financial uncertainty can keep people from seeking care, even when that care may be available at no cost.

That is why one finding from our recent Healthcare Affordability Pulse deserves attention – only 63% of employees knew preventive care visits were covered at 100% by their insurance.

• 24% thought they had to meet their deductible first.
• 9% thought they still owed a copay.
• 50% of lower-income employees and 51% of Gen Z employees misunderstand preventive care coverage.

This confusion is far too common. And it’s far too costly for patients, for payers, and for the healthcare system as a whole.

Misunderstanding preventive care coverage can make regular visits feel financially risky, even when the care may be available at no cost. For benefits leaders, the lesson is simple. Employees don’t just need access to preventive care. They need help understanding how it works, when it applies and how to use it with confidence. Preventive care only works when people understand it, trust it, and use it. We cannot let financial fears stand in the way of good and efficient healthcare.

What is preventive care coverage?

Preventive care includes routine services that help people stay healthy or identify potential health issues before they become more serious. This includes:

• Annual wellness exams
• Annual recommended screenings such as mammograms for women, prostate-related screenings for men, and colonoscopies for people who meet age and risk-based guidelines
• Immunizations
• Screenings for cholesterol, blood pressure, and more
• Diabetes care management and supplies

The Internal Revenue Service (IRS) releases new guidance on types of preventive care that can be covered by high-deductible health plans (HDHPs), so more services may fall into this category.

Under the Affordable Care Act (ACA), most non-grandfathered private health plans must cover certain preventive services, including recommended screening tests, immunizations, and wellness visits.² The law requires most plans cover these at 100%, so the patient would not see a bill or copay, even if they haven’t yet met their deductible.

That distinction matters for employees enrolled in HDHPs with HSAs. Many people assume “high deductible” means they must pay out of pocket for every service until they meet the deductible. But eligible preventive care is an important exception: when the service is covered, in network, and billed as preventive, the plan generally pays 100%.

When is preventive care not 100% covered?

Preventive care coverage is powerful, but it’s not unlimited. Employees should understand the common situations when they may still receive a bill:

• Out-of-network care: No-cost preventive care is generally guaranteed only when delivered by an in-network provider.
• Grandfathered plans: Some plans that existed before the ACA may not follow the same preventive care rules.
• Diagnostic services: A visit that starts as preventive may become diagnostic if the provider evaluates or treats a new or existing health concern.
• Non-recommended services: Tests outside the required preventive guidelines may fall under normal cost-sharing.

Here’s a real-world example. An annual mammogram is covered at 100% when an employee uses an in-network provider and meets the recommended screening guidelines. But if the care team finds something concerning and orders a diagnostic biopsy, that follow-up may get billed under the plan’s standard deductible, copay, or coinsurance.

Why skipping preventive care can cost more later

When employees are worried about surprise bills or rising deductibles, they may delay even routine care. Our recent research also found that 36% of healthcare consumers have skipped or delayed needed medical care due to cost concerns in the last 6 months.

This financial pressure is not happening in isolation. Annual premiums for employer-sponsored family health coverage rose to $26,993 last year, and employees are now contributing an average of $6,850 toward family coverage.³

For employees living paycheck to paycheck, even the possibility of a surprise medical bill can be enough to avoid care altogether.

But delayed preventive care can create a different kind of risk. When people miss screenings, vaccinations, or routine checkups, they may be more likely to experience worsening symptoms, delayed diagnoses, disease progression, and more complex treatment needs.⁴

The costs can add up quickly. For many employees, an eligible annual physical costs the patient $0 when it is in network and billed as preventive. That same visit can reveal a pre-diabetes diagnosis – and create an opportunity to make healthy changes before chronic disease sets in. By comparison, the average patient with Type 2 diabetes pays $3,400 to $4,600 out of pocket every year for medications, supplies, and visits.⁵

Can HSAs help incentivize preventive care?

Our research reinforces something I have believed for a long time: health savings and health confidence are connected. We found that employees with HSAs were 11% more likely to understand that preventive visits are 100% covered.

Those who have taken the time to set up an HSA have likely invested more time and research into both their healthcare benefits and their financial wellness. When they contribute to their accounts, they’re demonstrating a personal stake in saving for both routine and emergency healthcare expenses.

But employees are just half the picture. They need the support of benefits leaders to make the most of their health benefits.

Benefits teams should ask themselves:

• Is our employer HSA contribution enough to incentivize HDHP adoption?
• Are we offering financial incentives for preventive care, especially for lower-income or younger employees?
• Have our contributions kept up with inflation and rising deductibles?
• Do our people have enough saved for routine health expenses?
• Do we have point solutions and programs that proactively address employee health needs?

If the answer to many of these questions is “no” it may be time to take a fresh look at the role preventive care, HSA contributions and financial readiness play in your overall benefits strategy.

How can benefits leaders improve preventive care education?

Employees may be more likely to use preventive care when the information is simple, timely, and repeated across channels. Benefits leaders can close the gap by treating preventative care education as an ongoing engagement strategy.

Three steps can help:

1. Emphasize preventive care in benefits education. Explain that many preventive services are covered at 100% when employees use in-network providers and meet plan guidelines. Spell out the difference between preventive and diagnostic care and schedule year-round benefits literacy efforts.

2. Use reminders and incentives. Consider incentive programs that encourage employees to schedule age-appropriate screenings and routine visits. These may include cash rewards for regular screenings, employer HSA contributions tied to completed preventive care appointments, participation in wellness programs, or other programs that enable employees to seek and follow through on preventive visits.

3. Support financial readiness with HSA contributions. Employer HSA contributions can help employees feel more prepared for eligible out-of-pocket costs, including care that is not categorized as preventive or follow-up from regular preventive visits. Employers should regularly evaluate whether their HSA contributions are keeping pace with deductibles, healthcare costs and the needs of their workforce.

The goal is not just to tell employees that preventive care is covered. It is to help them understand how to use that coverage confidently and feel financially prepared for healthcare costs.

Preventive care and health savings go hand in hand. When we get it right, people are more likely to catch problems early, avoid unnecessary costs, and live healthier lives. That is the kind of healthcare experience employees deserve, and it is exactly why we do what we do.

One of my favorite quotes that speaks to how preventative care can help employees and reduce costs for employees and employers is from Benjamin Franklin: “An ounce of prevention is worth a pound of cure!”⁶

FAQs: Preventive care, HSAs, and employee benefits

Is preventive care free with an HSA-qualified health plan?

Often, yes, when the service is eligible, provided by an in-network provider and billed as preventive. In those cases, employees generally do not pay out of pocket, even if they have not met their deductible. Employees should always check their plan documents or contact their health plan before receiving care.

What preventive care is usually covered at 100%?

Common examples include annual wellness visits, recommended vaccinations, blood pressure screenings, cholesterol screenings, diabetes screenings, and certain cancer screenings. Coverage depends on the employee’s age, sex, risk factors, provider network, and plan rules.

How can employers incentivize preventive care?

Benefits leaders should consider HSA contributions, incentive programs, and benefits education to help employees better understand their preventive care coverage.