The Employee Benefit Research Institute (EBRI) created the EBRI HSA Database to analyze behavior exhibited in health savings accounts (HSAs). The following information is taken from the Issue Brief, which is the fifth annual report representing data from the EBRI HSA Database.
What is an HSA?
A health savings account (HSA) is a tax-exempt account that is funded with contributions and assets that an individual can use to pay for health care expenses. Similar to a savings account, you can routinely contribute funds as long as you remain eligible. Unused funds are rolled over from year to year as long as your account remains active. In order to enroll in an HSA, you must be enrolled in an eligible high deductible health plan that meets the deductible requirement set by the IRS. HSA qualified health insurance plans typically have smaller monthly premiums.
Three major tax advantages to owning an HSA:
- Cash contributions to an HSA are 100% deductible from your federal gross income (within legal limits).
- Interest on savings accumulates tax deferred.
- Withdrawals from HSA for qualified medical expenses are exempt from federal income tax.
HSAs are growing.
HSAs were established in 2004 and have since been an emergent part of employment-based health benefit programs. Due to the short amount of time that HSA plans have been in existence, most plans are relatively new; 73% have been opened since 2014.
Balances increased in 2017.
There was a significant increase in HSA balances in 2017. By the end of the year, two-thirds of account holders had positive net contributions, and 95% of all HSAs ended the year with roll over funds available for future expenses.
Contributions to HSAs are rarely maximized.
EBRI’s research has concluded that HSAs are rarely maximized. In 2017, only 13% of account holders contributed the fully permissible annual amount. 50% of HSA owners contributed to their account, and 36% of HSAs did not receive any contributions (individual or employer) at all.
HSA owners were evenly distributed by age.
The 2017 EBRI HSA Database exhibits that most HSA owners were fairly evenly distributed by age. As shown in the table below, roughly one-quarter each were ages 25–34, 35–44 and 45–54. 18% were ages 55–64, while only 3% were under the age of 25, and 4% were ages 65+. The average age of a HSA owner was 43.3 years. The table below shows a comparison between the EBRA HSA Database and the average age of adults with group health coverage from the March 2017 Current Population Survey (CPS).
For more information, visit www.ebri.org to view the full EBRI report.
Paul Fronstin. “Health Savings Account Balances, Contributions, Distributions, and Other Vital Statistics, 2017: Statistics From the EBRI HSA Database.” EBRI Issue Brief, no. 461 (Employee Benefit Research Institute, October 15, 2018).