• High incidence of withdrawals - Overall, just over half of accountholders withdrew funds. The average distribution increased slightly relative to 2020, when fewer patients sought health care NEWS FROM THE EMPLOYEE BENEFIT RESEARCH INSTITUTE services due to the COVID-19 pandemic. • Low use of investments - Few accountholders took advantage of the ability to invest HSA funds, Analysis of Health Savings Account Database With Over 13 Million Accounts Finds Accountholders as only 12% of accountholders invested in assets other than cash. However, the share of Paying Health Care Expenses, Not Fully Taking Advantage of Tax Benefits accountholders who invested their HSAs has increased five years in a row and saw its largest year- over-year increase in 2021. For immediate release: 3/1/23 For more information: Ron Dresner In addition to tax benefits, HSAs also allow accountholders to roll over their balances from year to dresner@ebri.org year to accumulate more savings for future medical expenditures, as well as medical expenditures in retirement. “Medical expenses in retirement can be substantial, with married couples potentially (Washington, D.C.) – A new research report by the Employee Benefit Research Institute (EBRI) that needing to save as much as $383,000. On average, accountholders appear to be using HSAs as examined a database containing information on over 13 million health savings accounts (HSA) specialized checking accounts rather than investment accounts, though this behavior appears to found that most accountholders use their HSAs to pay for current expenses and do not take change the longer an HSA owner holds an account. Conducting an analysis of the EBRI HSA complete advantage of the tax benefits HSAs offer. The average accountholder has a modest Database, our research found evidence that the longer an accountholder had their HSA, the higher balance, contributes far less than the maximum and does not invest their HSA. However, the longer the likelihood that the accountholder invests their HSA in assets other than cash, in addition to someone owned an HSA, their balance tends to be larger, contributions tend to be higher, and they contributing more on average and enjoying higher account balances,” said Paul Fronstin, director, are more likely they are to invest their HSA in assets other than cash. Health Benefits Research, EBRI. The study, “Trends in Health Savings Account Balances, Contributions, Distributions, and The EBRI HSA Database is a representative repository of information about individual health savings Investments, 2011–2021,” reported these strategies can better position accountholders to accounts. The database is unique because it includes data provided by a wide variety of account withdraw larger sums when unexpected major health expenses occur and can leave accountholders recordkeepers and represents the characteristics and activity of a broad range of HSA owners. As more prepared to cover their health care expenses in retirement. of Dec. 31, 2021, the EBRI HSA Database includes 13.1 million health savings accounts totaling $39.5 billion in assets. In general, HSAs offer a triple tax advantage to accountholders -- enabling a person to stretch money earmarked for health care expenses even further. The tax benefits of HSAs are maximized To view a summary of the research report, “Trends in Health Savings Account Balances, when accountholders contribute the statutory maximum and minimize withdrawals for current Contributions, Distributions, and Investments, 2011–2021,” visit www.ebri.org/hsa-long-2023. medical expenditures and invest their HSA balances in assets other than cash. “Average contributions are well below the statutory maximum, most accountholders take a distribution from The Employee Benefit Research Institute is a non-profit, independent and unbiased research their HSA, and relatively few accountholders invest. This is not to say the picture is bleak. Despite organization that provides the most authoritative and objective information about critical issues increased health care spending in the wake of the COVID-19 pandemic, average balances in HSAs relating to employee benefit programs in the United States. For more information, visit increased since 2020, rising from $3,622 to $4,318 in 2021. Encouragingly, the share of www.ebri.org. accountholders who invest their HSAs has steadily risen since EBRI began analyzing its HSA Database nine years ago,” explained Jake Spiegel, research associate, Health and Wealth Benefits # # Research, EBRI. (MEDIA NOTE: To receive the complete 22-page research report, email dresner@ebri.org). Key findings about HSA utilization in the report include: • Relatively low balances - Since the establishment of the EBRI HSA Database, average account balances have generally trended upward. End-of-year balances increased in 2021, but overall, average balances are still modest. • Contributions below the maximum - Both the average employee and employer contributions decreased relative to 2020. The average combined HSA contribution in 2021 was $927 less than the statutory maximum contribution for individuals and $4,527 less than the statutory maximum contribution for accountholders with family coverage.