HSA contributions differ by zip code, income, and race

The never-ending debate on the rising costs of health care comes with a twist, in a recent analysis of high-deductible health plans (HDHPs), typically offered with health savings accounts (HSAs), which have quickly become part of every day health care management. A report from the Employee Benefit Research Institute (EBRI), called “Examining HSAs Through a DEI Lens,” now shows discrepancies in HSA accountholder behavior and attributes between zip codes with disproportionate race and ethnicity composites.

The report finds that accountholders in predominantly White ZIP codes had an average HSA balance of $5,004 compared with an average HAS balance of $3,438 and $3,737 for accountholders living in disproportionately Black and Hispanic neighborhoods, respectively.

Interestingly, the amount within the balances is not correlated to how long the accounts have been in existence, according to the analysis. Therefore, these balances are not built up because of time, but rather contribution behavior.

Also accountholders living in disproportionately White ZIP codes contributed $1,806 to their HSA on average, compared to $1,312 and $1,294 for disproportionately Black and Hispanic ZIP codes, respectively. White and Asian ZIP codes are more likely to take advantage of the ability to invest in HSA balances. Only 6.3% of accountholders in Black ZIP codes and seven percent of those in Hispanic ZIP codes were HSA investors, according to the report.

Gender also plays a role in the spending behavior of HSA accountholders. EBRI says that male HSA accountholders had larger balances on average ($6,517) than women ($1,981). Similarly, males contributed, on average $1,980 compare with female contributions of $1,508. Salary discrepancies and some families receiving healthcare benefits through a male worker may explain some of that gap.

Interestingly, and against the trend seen in other categories, despite women contributing less to their HSAs, a higher share of female accountholders (66%) took distributions than males (62%). Women tend to incur more medical expenses than men, which explains the distribution, although men, when taking distributions, will take a higher proportion than women.

Finally, the EBRI study looked income analysis on HSA contribution and distribution levels. As expected, average HSA balances increased alongside income. Accountholders living in the lowest income quartile had an average balance of $2,229 compare with $3,009, $3,693 and $5,919 for those living in the 2nd, 3rd and highest quartiles. EBRI notes that despite HDHPs often featuring lower premiums than other health care plans, lower-income accountholders may have cash flow or budgetary issues that make it difficult to contribute as much to their HSAs as their higher-income counterparts.