A 2013 Research Study by the Employee Benefit Research Institute and Mathew Greenwald & Associates found Health savings accounts and the number of people using them jumped from 6.6 million in 2012 to 7.2 million in 2013. Total assets in HSAs increasing to $16.6 billion from $11.3 billion during the same time period.
Starting in 2004, employers were able to also start offering health plans with HSAs, tax-exempt trusts or custodial accounts that individuals can use to pay for health care expenses. “As the number of people with account-based plans expands, total assets in these accounts can be expected to grow as well,” said Paul Fronstin, EBRI’s director of the Health Research and Education Program, in a statement.
Fronstin notes in the research the importance of tracking employer contributions. In 2013, individuals with an employer contribution of less than $1,000 had an average account balance of $2,140, while those with an employer contribution of at least $1,000 had an average of $2,889 in their account. Similarly, individuals who contributed less than $1,000 had an average account balance of $1,569, while those who contributed at least $1,000 had an average balance of $3,196.
As it stands now, account balances in these plans are low and are therefore invested in relatively safe vehicles such as money market funds (investments are usually restricted to a money market fund until the savings account reaches a minimum threshold, such as $2,000 or $3,000). As account balances grow, however, Fronstin notes “the potential to invest in more risky investment vehicles (such as mutual funds and stocks) will grow. The opportunities for capital appreciation will increase but so will the opportunities for capital losses, even among individuals with high levels of employer and individual contributions.”