People simply don’t think of health savings accounts as a long-term option. As a result, they overlook HSAs’ value as a long-term savings tool.
That’s one finding in a study from UMB Healthcare Services, which found that not even one percent of people in the study maxed out their allowable contributions. People are so used to using HSAs the same way they use their flexible spending accounts (FSAs)—which are bound by use-it-or-lose-it rules—that they overlook the long-term nature of HSAs.
The study builds on an HSA Consulting Services white paperrecently released that pointed out the benefits of long-term investing within an HSA as a potential retirement savings tool.
The UMB report said that, in a study of 175,000 HSA holders, the average balance was just $1,800, with an average annual contribution of only $1,016 annually.
That’s quite a bit less than the 2015 maximum allowable contribution of $3,350 for individuals or $6,650 for families. (Those over 55 can add an additional $1,000 to those amounts.)
And when you consider that those amounts are deductible from gross income, you realize that people are missing out on a real bonanza by not taking full advantage of these accounts.