The average HSA balance reached $2,672 in 2019, up from just over $2,180 at the start of the year, according to EBRI. The Employee Benefits Research Institute released an issue brief in January that shows account holders were building savings, particularly if they had an employer that was making contributions as well.
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EBRI drew from its database of 10 million HSA accounts for its analysis. It found that account owners who get a contribution from their employer had higher total contributions in 2019, setting aside $2,846, compared to $2,455 saved by people who are doing it on their own. They were also more likely to have other investments in their HSAs (9% versus 7%).
However, EBRI also found that account owners who get a contribution from their employer took more distributions, and larger ones, that people who only had their own money in the account.
Almost two-thirds of HSAs made distributions in 2019, but EBRI believes that accounts that didn’t experience a distribution aren’t a result of account owners sitting on those savings. EBRI found that 55% of those nondistributing accounts also didn’t receive a contribution, either from an employee or an employer.
“This suggests that the lack of distributions was not because accountholders are increasingly using HSAs as savings vehicles but rather because the accountholder has become disengaged from the account,” according to the issue brief.
Of course, EBRI’s data excludes the impact of the pandemic on health savings accounts, which, according to Lively’s 2020 HSA Spend Report, is sizable.
“COVID-19 has left millions of Americans feeling uncertain about their financial futures. Many have had to dip into their long-term savings to stay afloat,” Shobin Uralil, COO and co-founder of Lively, said in a statement. “While HSA account holders may have spent their money differently to adapt to the pandemic this year, rising healthcare costs are still making it tough to save for things like retirement. It’s never been more important to ensure that people with HDHPs know about their potential savings opportunities to get back on track for future health events.”
Devenir’s 2020 midyear HSA report found that HSA account owners withdrew $16.3 billion from their accounts as of June 30, 2020, and contributed $23.6 billion.
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Danielle Andrus works as an editor for the Financial Planning Association (FPA).