Employees might be getting the hang of saving in a health savings account—either that, or they're so concerned about how much they'll have to spend on medical care that they're managing to save more than they need in a single year.
That's according to new research from the Employee Benefit Research Institute. Its HSA database findings indicate that more than 90 percent of HSAs with individual or employer contributions in 2016 ended the year with funds to roll over for future expenses.
The findings, published in its Sept. 19 EBRI Issue Brief, "Health Savings Account Balances, Contributions, Distributions, and Other Vital Statistics, 2016: Statistics from the EBRI HSA Database," reveal that two thirds of account holders ended 2016 with positive net contributions, meaning they put more into their accounts than they withdrew throughout the year.
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As of the end of 2016, the average HSA balance among account holders with individual or employer contributions in 2016 was $2,532, up from $1,604 at the beginning of the year.
"In 2016, 66 percent of account holders had positive net contributions, meaning their annual contributions were higher than their annual distributions," Paul Fronstin, director of EBRI's Health Research and Education program and author of the report, says in a statement.
Fronstin adds, "While it is plausible that account holders overestimated the expenses they would have during the year, it is equally possible that individuals intentionally hoped to build up savings in their account."
The research reveals additional trends, including that account holders aren't maximizing their contributions.
On average, the data indicate that individuals making contributions in 2016 contributed $1,986 over the year and HSAs receiving employer contributions in 2016 received $935.
But only 13 percent of account holders contributed the fully allowable annual amount.
In addition, if they put money in 2016, they took most—but not all—of it out again, also during 2016. Three fourths of HSAs with a 2016 contribution also had a distribution during 2016.
Of the HSAs with distributions, the average amount distributed was $1,766, less than the average contribution, resulting in balance increases. The presence of individual or employer contributions were associated with an increase in account balances in 2016—even if account holders took a distribution.
But account holders aren't boosting long-term savings through investing their account assets. Just 3 percent of HSAs had invested assets (beyond cash). "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," the report says, with "[b]oth investors and noninvestors us[ing] the HSA to self-fund current uninsured medical expenses."
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