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PERSONNEL MATTERS: Most HSA holders spend down accounts

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By Jerry Geisel, Crain News Service

CHICAGO (July 11, 2014) — A majority of health-savings account (HSA) holders spend most of their account balances to pay for healthcare expenses, resulting in relatively small year-end balances, according to a new survey.

The joint America’s Health Insurance Plans/American Bankers Association survey found that in 2012 a majority—52 percent—of account holders spent more than 80 percent of their HSA balances on health-care expenses, while just 26 percent of account holders spent less than 20 percent of accumulated funds on health-care expenses. Twenty-one percent of account holders spent between 20 and 80 percent of balances for health-care expenses.

With much of the HSA balances being tapped during the year to pay for health-care expenses, the balances themselves are relatively small. At year-end 2012, 19 percent of HSAs had a zero balance, while 31 percent had balances between $1 and $499, according to the survey, which was released July 10.

Still, some account holders have been able to build relatively high balances. For example, at year-end 2012, 12 percent of accounts had balances of more than $5,000 and 14 percent had balances between $2,000 and $4,999. The average account balance in 2012 was $2,136.

A key reason for the relatively low balances is that HSAs must be linked to high-deductible health insurance plans, with employees drawing on their accounts to pay for uncovered expenses, such as those falling under the deductible. This year, the minimum deductible for single coverage in health plans linked to HSAs is $1,250, with a $2,500 minimum deductible for family coverage.

The survey is based on an analysis of 1.4 million HSAs that were open as of Dec. 31, 2012.

This report appeared on the website of Business Insurance magazine, a Chicago-based sister publication of Tire Business.

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