A new research report, “Health Savings Account Balances, Contributions, Distributions, and Other Vital Statistics, 2023: Evidence From the EBRI HSA Database,” published today by the Employee Benefit Research Institute, found health savings account (HSA) balances rising while one-third of accountholders were withdrawing more money than they contributed. Research also uncovered that few accountholders contributed the statutory maximum in 2023 or took advantage of the ability to invest assets in HSAs.
The research report is based upon the unique EBRI HSA Database, which contains information on over 14.5 million accountholders. “Health savings account (HSA)-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, report co-author, senior research associate, Health and Wealth, EBRI. “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.”
Key findings in the new research report include:
• Health savings account balances continued to increase over the course of the year, despite higher spending on health care. Out-of-pocket patient spending on health care increased in 2023, rising 7.5% over 2022. Still, average end-of-year HSA balances were higher than average beginning-of-year balances.
• Accounts that received an employer contribution reflected higher total contributions and were more likely to invest. In all, 43% of accountholders received an employer contribution.
• Most accountholders took a distribution in 2023. More than half of the HSAs in EBRI’s database had a distribution in 2023, and the average distribution was $1,801.
• Relatively few HSAs are invested. One of the largest advantages HSAs offer is the ability to invest assets within the account and that investments grow on a tax-free basis. However, the report’s analysis reveals that only 15% of accountholders invested their HSAs in assets other than cash.
• Age and tenure play a major role in HSA utilization. Consistent with previous findings, accountholder age and tenure are closely related to average balances, contributions and distributions, as well as the propensity to invest. On average, older accountholders contributed more to their HSAs, had higher balances, more frequently took distributions and had a higher likelihood of investing at least some portion of their HSA in assets other than cash.
“Our analysis finds evidence that accounts with employer contributions tended to have higher total contributions and more frequently contained investments 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., report co-author and director, Health Benefits Research, EBRI. “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. Indeed, accountholders with employer contributions still take larger distributions than their counterparts who did not receive an employer contribution. 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 is a representative repository of information about individual HSAs. The database is unique because it includes information provided by a variety of account recordkeepers representing the characteristics and activity of a broad range of HSA owners. As of Dec. 31, 2023, the EBRI HSA Database includes 14.5 million health savings accounts representing $48.4 billion in assets.
• Age and tenure play a m Na ejo wr s rF o rlo em inT H he SA E u m tipl liz o ay ti e o en B . Co ene nfit sis R ten ese t w ar it ch h p In re stit vio ut us e fi ndings, accountholder age and tenure are closely related to average balanc es, contributions and distributions, as well as the proW pehi ns le it y Ac to c o in un ves t B t.a O lan nc ae ver s R aig se e,, o Nle dw er H ac ec ao lth un S th ao vilng des rsA cc o cn otun rib tu R te ed se m ar o crh e t Ro e po the rt irF HS ind As s, O h ne ad - T hhi igr h d er o f balances, more frequen Ac tly c t oo un ok th d o is lde trib rs u W tioin th s an dred w h M ad o a re h T ig ha her n T lihe kely ih C o o o nt d o rib f ut inv ees d ting at least some portion of their HSA in assets other than cash. - Research also uncovers that few accountholders contributed the statutory maximum in 2023 and “Our analysis finds evidence h to hla d t as acs cet ou sn o tt sh w er it t hh e am n c pa lo sy her inc to hn ei tr ri ac buc ti o o u n n st t se – n ded to have higher total contributions and more frequently contained investments other than cash. This evidence suggests that em Forp im loy m er es d c ia a tn e p rel laea y a c se:r u 6c /i1 a2 l r /2 o5 le in fostering employee engagement with their HSAs. One clear avenue i F so fro m r e om re piln ofy o er rm s t ao ti c oo nn : R tro ib nu D te t res o n an er employee’s HSA on their behalf,” said Paul Fronstin, Ph.D., report d co res -au nt er@e hor an brd i. o dr ir gec tor, Health Benefits Research, EBRI. “Providing an employer contribution to an HSA w ill not automatically turn that accountholder into an investor who uses their HSA as a long-term s (W ava in sh gs in v geh toin c,l D e i .C. ns)t ea – A d n oe f a s w rh es oea rt-rtc erm h rep sp oe rt n,d “iH ng ea vleh th S ica le. vi I nn gd see Ac d c,o ac un ct o B ua nlta h n o cles de,r Co s w n it tr hi em butip oln os y,er D co is n tt rr ib ib u u ti ti o on n ss, a sti nld l t O ak th eer lar V gier tald Sit sa tr ti ib sti uc tiso , n 2s 0 t 2h 3a : E n v tih dei er n c ce F oun ro ter mp ta hre tsE w BR hIo H d SiA d D no at t a rb ec as ei e, v” e p an ub e lim sh p ed lo t yer oday c bo yn tt h re ibE um tio pn lo . y Ho eew Bever enefi , itt R is es cea lea rr c h th Ia nts ti pt la un te s,p fo on us no dr s h an eald t a h s da m viin nig ss t ac ratc oo rs u n pt la (y H a c SA) r b itia cla aln rc oes le i rn is h ine gl p w in hg il e o ac nc eo -u th nit rh do o ld f ac ers c t oa uk n e a tho lo ld n eg rer s w -ter erm e w viit e h w d o rafw HS ing A s m an ord e tm he on ro ey le tt h h ae n y t c h a ey n p clo an yt irn ib tu hte ed ir fi . 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K ey findings in the new research report include: T he Employee Benefit Research Institute is a non-profit, independent and unbiased research • Hea organi lz th ati so av ni n th ga s ac t pr co ov uin dt es b a th la e m nces os c to an uti th no ur ed ita tti ov ie a ncr n ea d o se o bjev ce ti rv t e i he c nfo oru m rs a e o tiof n t a hb e y ou ea t c r,r id ties cap l iitse h sues igh er r sel pen atid nig n t go o e nm hp ea lo lt yh ee c a b ren e. e Ofi utt - p of ro -p gr o a cm ke st i p n t ati hen e U t s nip te en d S dit n ag t o esn . T hh ea e o lth rg c aa n rie z i an tic orn ea al ss ed o c in o o 2r0 d2 in 3a , r tes isi ng 7.5% a oc vti er vi2 ti0 es 22 f.o S r ti th ll,e a Cen vera ter ge en for d R -es ofea -yea rch r o HS nA H b ea alla tn hc B es en w eer fite s I h nin gh oer vati th oa nn , F aiv ner an ac gie alb W eg el in lb ne in in gg -of Res -yea earr ch b Ce aln atn er ces an . d Retirement Security Research Center and produces a variety of leading industry surveys d uring the year. For more information, visit www.ebri.org. • Accounts that received an employer contributio #n re# fl ected higher total contributions and were more likely to invest. In all, 43% of accountholders received an employer contribution. (MEDIA NOTE: Email Ron Dresner at dresner@ebri.org to receive the complete research report). • Most accountholders took a distribution in 2023. M ore than half of the HSAs in EBRI’s database had a distribution in 2023, and the average distribution was $1,801. • Relatively few HSAs are invested. One of the largest advantages HSAs offer is the ability to invest assets within the account and that investments grow on a tax-free basis. However, the report’s analysis reveals that only 15% of accountholders invested their HSAs in assets other than cash.