Holders of health savings accounts are not just underutilizing HSAs by not saving enough in them, they’re also not capitalizing on what could be their greatest feature: investing.
So says a report from the Employee Benefit Research Institute, which reviews the trends in HSA usage from 2011–2016. Its database of 5.5 million accounts, with total assets of $11.4 billion as of Dec. 31, 2016, reveals that the average account holder apparently uses his HSA more as a specialized checking account, instead of as an investment account.
The full report, which looks at account balances, individual and employer contributions, distributions, invested assets and account-owner demographics for the period, finds that although HSAs “offer a valuable tax incentive to set aside money on a tax-favored basis for current or future medical expenses,” the majority of account holders are only using them for basic current expenses, such as deductibles, coinsurance and copayments.
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