What You Need to Know
- The increase is mainly due to a majority of account holders either not taking a 2020 distribution or taking one under $500.
- Older workers tend to have larger balances than younger ones.
- Few account holders take advantage of the ability to invest HSA assets.
The average health savings account balance increased by more than one-third in 2020, according to a recent study from the Employee Benefit Research Institute that examines how HSA holders contribute to, withdraw from and invest in their HSAs.
The average balance increase was even larger when the analysis focused only on accounts that had received either an employee or employer contribution — up to 50% for the year.
EBRI explained that this had mainly to do with a majority of account holders either not taking a distribution in 2020 or taking one smaller than $500, a decrease from 2019.
The study encompasses the 11.4 million HSAs in EBRI’s HSA Database that were open for at least part of 2020, up from 10.5 million open accounts in 2019, and accounting for about 40% of the market.
Assets contained within accounts captured by EBRI’s database grew to $32.9 billion, up from $28.1 billion in 2019.
Age and Tenure
EBRI found that the older the account holder, the higher the average HSA balance.
It noted that older workers tend to earn more than younger workers and to have a longer account tenure, which helps them accumulate larger balances and acquire more experience with managing and understanding how HSAs fit into their finances.