More HSA Account Holders Have Funds to Roll Over

Of the HSAs with distributions, the average amount distributed was less than the average contribution, resulting in balance increases, EBRI finds.

By PS

Enrollment in high-deductible, health savings account (HSA)-eligible health plans was estimated to be between 20.2 to 22.6 million policyholders and their dependents, and covered nearly three in 10 employees in 2016, according to the Employee Benefit Research Institute (EBRI) HSA Database, which contained 5.5 million accounts with total assets of $11.3 billion as of December 31, 2016.

Similarly, there were an estimated 20 million HSAs as of the end of 2016. Most HSAs in the EBRI HSA Database are relatively new; more than three in four (77%) have been opened since 2013.

Two-thirds of account holders ended 2016 with positive net contributions, meaning annual contributions were higher than annual distributions. More than 90% of HSAs with individual or employer contributions in 2016 ended the year with funds to roll over for future expenses.

As of the end of 2016, the average HSA balance among account holders with individual or employer contributions in 2016 was $2,532, up from $1,604 at the beginning of the year. Only 3% of HSAs had invested assets (beyond cash).

On average, individuals who made contributions in 2016 contributed $1,986 over the year and HSAs receiving employer contributions in 2016 received $935. But only 13% of account holders contributed the fully allowable annual amount.

Three-fourths of HSAs with a 2016 contribution also had a distribution during 2016. Of the HSAs with distributions, the average amount distributed was $1,766, less than the average contribution, resulting in balance increases. The presence of individual or employer contributions were associated with an increase in account balances in 2016—even if account holders took a distribution.

Investors (beyond cash) had much higher account balances than non-investors. While it might be expected that individuals who invested their account balance were using the account solely as a long-term savings vehicle, the opposite appears to have been true, EBRI says. Both investors and non-investors used their HSAs to self-fund current uninsured medical expenses.

Investors were more likely than non-investors to take a distribution (69% and 63%, respectively). In addition, when distributions were taken, investors took larger distributions ($2,451) than non-investors ($1,740) during 2016. However, EBRI notes the larger distributions may have been because investors had larger account balances.

The full EBRI Issue Brief may be downloaded from here.

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