A new report from J.P. Morgan provides more evidence of health savings accounts' growing popularity. The report is based on the account activity of over 500,000 account holders in 2009.
Forty-five percent of account holders had over $1,000 in cash in their HSA at the end of 2009, up 10 percentage points from the 2008. The report also noted that accounts with higher cash balances are increasing. At the end of 2008, half of account holders had $500 or less in their accounts; today, 42 percent have a balance of $500 or less. Accounts with over $2,000 increased from 20 percent to 31 percent in 2009.
The average HSA total balance was $1,393 in the fourth quarter of 2009. However, the average HSA investment balance was over $6,000. Over half of investment balances were in equities, while 30 percent were allocated to money market funds.
Over two-thirds of account holders contributed more than they spent in 2009, but the report identified a spike in contributions in January, when many new high-deductible health plans take effect, and a smaller bump in April, the deadline to apply contributions to the prior tax year.
Account holders are overwhelmingly using their HSA accounts like a credit card. Seventy percent of workers signed for their purchases, rather than make an ATM withdrawal or use a PIN number at the point of purchase. While account holders spend more HSA dollars on doctors, the volume of transactions was just over 13 percent. Purchases at drugstores accounted for over 28 percent of transactions.
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