By Pension and Benefits Editorial Staff
Sixty percent of health savings account (HSA) accountholders withdrew funds to pay for current health care expenses, such as deductibles, coinsurance, and copayments, instead of using the HSA to save to health care expenses in retirement, according to research from the Employee Benefit Research Institute (EBRI). The study, Trends in Health Savings Account Balances, Contributions, Distributions, and Investments, 2011‒2019: Estimates From the EBRI HSA Database, examined 10.5 million HSA accounts from 2011 through 2019.
The study found the following:
- Modest balances. Between 2011 and 2019, end-of-year account balances increased but remained low—going from $1,990 in 2011 to $3,221 in 2019.
- Contributions below the maximum. Average total contributions—combined individual and employer contributions—increased from $2,348 to $2,959 between 2011 and 2019. However, this average was just above the minimum allowable deductible amount for family coverage and less than one-half of the allowable contribution maximum for family coverage.
- Low use of investments. Very few account owners invested their HSA balance in investments other than cash despite the tax-saving possibilities. In 2019, 7 percent had investments other than cash.
However, the study found that the longer the individual owned an HSA, the greater the likelihood their usage becomes more investment-like. EBRI found that accounts opened in 2019 had an average $1,056 year-end account balance, while accounts opened in 2009 had an average $9,398 year-end account balance. In addition, individual contributions averaged $1,061 among those accounts opened in 2019 but averaged $3,496 among those accounts opened in 2009. In other words, annual 2019 contributions were higher the longer an account owner had an account. Finally, the study noted that in 2019, 2 percent of accounts opened in 2019 had investments other than cash, compared with 13 percent among those opened in 2009.
Interested in submitting an article?
Submit your information to us today!Learn More