Health Saving Accounts See Growth
Health savings accounts (HSAs) are a popular option for many Americans looking to pay for medical expenses. And according to a new analysis by the Employee Benefit Research Institute (EBRI), HSA balances and contributions increased in 2021, despite employees spending more on healthcare.
The study found that the majority of HSA holders contributed more than they withdrew in 2021, resulting in an increase in balances. The average HSA balance rose from $2,645 at the beginning of 2021 to $3,902 by the end of the year. This is great news for those who use HSAs to pay for medical expenses, as it shows that they are able to save and prepare for future healthcare costs.
One reason for the increase in HSA balances is likely due to the fact that employees are becoming more aware of the benefits of HSAs. These accounts allow individuals to save pre-tax money for healthcare expenses and offer tax-free withdrawals for qualified medical expenses. In addition, many employers are also offering contributions to employee HSA accounts, which can help to boost balances even further.
Despite the increase in HSA balances, the study found that patients were seeking healthcare services more frequently in 2021 and spending more out of pocket than in 2020. This suggests that employees are utilizing their HSAs to pay for healthcare expenses and are relying on their accounts to cover the costs of medical care.
The EBRI study also found that the HSA market is growing rapidly, with the database covering $39.5 billion in assets and an estimated representation of 40% of the entire HSA market. This growth suggests that more and more individuals are turning to HSAs as a way to pay for healthcare expenses and are reaping the benefits of these accounts.
Overall, the increase in HSA balances and contributions in 2021 is a positive sign for the future of these accounts. As employees become more aware of the benefits of HSAs and utilize them to pay for healthcare expenses, these accounts will continue to grow in popularity and help individuals to better prepare for future medical expenses.
