While health savings account (HSA) balances rose in 2023, a significant number of account holders also withdrew from their balances, finds a new report by the Employee Benefit Research Institute (EBRI).
The report, “Health Savings Account Balances, Contributions, Distributions, and Other Vital Statistics, 2023: Evidence From the EBRI HSA Database,” analyzed data from over 14.5 million account holders, finding that one-third of account holders withdrew more from their HSAs than they contributed in 2023.
Further, over half of the HSAs in EBRI’s database had a distribution in 2023, with the average accountholder distributing $1,801.
With the latest research, EBRI says it hopes to spotlight the behaviors of HSA account holders and how some are utilizing the benefit for their healthcare needs.
“Health savings account-eligible health plans are an important part of the health benefits landscape. Yet, there is little empirical research about how HSAs are used by workers,” said Jake Spiegel, a senior research associate of Health and Wealth at EBRI, and who also co-authored the report. “Such analyses can not only inform strategies for plan sponsors wishing to help workers better utilize their HSAs, but also help HSA providers better position their offerings, as well as help policymakers craft sound policy.”
Despite the withdrawals by some, and in the midst of increased spending on healthcare needs, health savings account balances grew over the course of 2023, with average end-of-year HSA balances higher than beginning-of-year balances.
Age and tenure also played a major role in HSA utilization, with older account holders likelier to contribute higher amounts to their HSAs and hold higher balances than younger age groups. Seasoned accountholders were also more likely to take distributions and invest at least some portion of their HSAs to assets besides cash, EBRI reports.
Those who received employer contributions, at 43% of account holders, had higher total HSA contributions and were likelier to invest their HSAs. Still, EBRI’s report shows that only 15% of accountholders invested their HSAs in assets other than cash.
“This evidence suggests that employers can play a crucial role in fostering employee engagement with their HSAs. One clear avenue is for employers to contribute to an employee’s HSA on their behalf,” said Paul Fronstin, Ph.D., director of Health Benefits Research at EBRI and a co-author of the report. “Providing an employer contribution to an HSA will not automatically turn that accountholder into an investor who uses their HSA as a long-term savings vehicle instead of a short-term spending vehicle … However, it is clear that plan sponsors and administrators play a critical role in helping accountholders take a longer-term view of HSAs and the role they can play in their financial wellness.”
The EBRI HSA Database represents $48.4 billion in assets. Additional findings from the report can be found here.
SEE ALSO:
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Employees Call For Greater Access to HSAs
IRS Unveils Modest Growth for 2026 HSA Contribution Limits
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with nearly a decade of experience and a passion for telling stories and reporting news. She is originally from Queens, New York, but now resides in Denver, Colorado.