Plan sponsors that wish to introduce or continue offering health savings account (HSA)-eligible health plans as part of their workplace benefit program can benefit from insight into HSA accountholder behaviors. With this in mind, the Employee Benefit Research Institute (EBRI) has undertaken a series of annual reports drawing on cross-sectional data from the EBRI HSA Database. In the sixth annual report of this kind, EBRI examines account balances, individual and employer contributions, distributions, invested assets, and account-owner demographics as of year-end 2018. Such analysis can help not only plan sponsors but providers and policymakers better understand strategies that can help improve employee financial wellness.
Key findings this year are that:
HSAs are a significant and growing part of employment-based health benefit programs.
- Enrollment in high-deductible, HSA-eligible health plans was estimated to be between 23 and 36.8 million policyholders and their dependents and covered nearly 3 in 10 employees in 2018. The HSA market did not exist until 2004.
- Similarly, there were an estimated 25 million HSAs as of the end of 2018. Most HSAs in the EBRI HSA Database are relatively new; 71 percent have been opened since 2015.
HSA balances increased in 2018.
- Two-thirds of accountholders ended 2018 with positive net contributions, meaning annual contributions were higher than annual distributions.
- 93 percent of HSAs with individual or employer contributions in 2018 ended the year with funds to roll over for future expenses.
- As of the end of 2018, the average HSA balance among accountholders with individual or employer contributions in 2018 was $2,803, up from $2,071 at the beginning of the year. Only 8 percent of accounts with contributions ended 2018 with a zero account balance.
Contributions to HSAs are rarely maximized.
- One-half of HSA owners contributed to their account in 2018, and 37 percent of HSAs did not receive any contributions (individual or employer) in 2018.
- Among accounts with contributions, individual contributions in 2018 averaged $2,017, and employer contributions averaged $901.
- Only 14 percent of accountholders contributed the fully allowable annual amount.
- Three-fourths (76 percent) of HSAs with a 2018 contribution also had a distribution during 2018. Of the HSAs with distributions, the average amount distributed was $1,865, less than the average contribution, resulting in balance increases.
Investing alone does not maximize longer-term savings.
- Only 5 percent of HSAs had invested assets (beyond cash).
- 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. Both investors and non-investors used the HSA to self-fund medical expenses.
- Investors were more likely than non-investors to take a distribution (63 percent and 59 percent, respectively). In fact, when distributions were taken, investors took larger distributions ($2,570) than non-investors ($1,828) during 2018. However, the larger distributions may have been because they had larger account balances.