HSA balances increase, with owners socking away almost $42B: Devenir
Employers themselves accounted for 26% of the contributions to HSA accounts last year.
Assets in health savings accounts increased 25% to over $82 billion, according to Devenir’s 2020 Year-End HSA Market Statistics & Trends report. Account holders have amassed $82.2 billion across over 30 million accounts, the report found, with an average total balance of $17,926.
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Despite the volatility and financial uncertainty many investors experienced last year, account holders contributed more than they took out.
Devenir found owners socked away almost $42 billion, an 8% increase over 2019. Although they withdrew more than they did in 2019, up 4% to $30 billion, it was still well under what they contributed.
Although the average balance is almost $18,000, most account holders have less than $500 in their account. Devenir found 30% of account holders have a balance of between $1 and $499, while 20% have an open account with a $0 balance. Just 7% of accounts have a balance of $10,000 or more.
Looking at the 80% of funded accounts, employer-sponsored accounts have a significant impact on contributions. Fifty-nine percent of all HSA dollars are employee contributions, and they’re contributing big amounts — an average $2,054 in 2020.
Employers themselves accounted for 26% of the contributions to HSA accounts last year, with an average contribution of $870.
Fewer account holders are saving in an individual HSA account, but they’re saving almost as much as employees. Twelve percent of HSA contributions in 2020 went to an individual account not associated with an employer, with an average contribution of $2,033.
Investments
Meanwhile, accountholders are getting more comfortable with using their HSAs as an investment tool, instead of strictly a savings account. Almost 6% of accounts — 1.7 million — invest some portion of their HSA dollars.
That’s paying off for those investors, as the market gains of the end of 2020 pushed HSA investments up 52% over 2019. HSA investments are worth $23.8 billion, Devenir found, almost 30% of total HSA assets.
Related: How to add 37% to your tax-free retirement contributions this year
Account holders who invest in their HSAs have an average balance that is 6.5 times larger than the average balance of account with no investments.
Devenir estimates that investment assets will reach $28.6 billion by the end of this year, and continue increasing to almost $41 billion by 2023.
Good start to 2021
January was an active month for HSAs. At the end of 2020, about 20% of accounts were unfunded, but that fell to 18% in the first month of 2021.
“This data point continues to reaffirm our belief that a significant portion of the unfunded accounts found during the year-end survey are attributed to accounts being opened during the fall enrollment season, but not being funded until early the following year,” Devenir wrote.
Over a third of HSA accounts received a contribution from an employer, who together account for 60% of all contributions in January, according to the report.
New account holders are off to a good start. The average balance for accounts opened in 2021 is $893.
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