Health Savings Account Balances, Contributions Grew in 2021

The average health savings account (HSA) balance increased in 2021, with most account holders contributing more money than they withdrew, according to a report from the Employee Research Benefit Institute (EBRI).

The report analyzed EBRI’s HSA Database, which included 13.1 million HSAs in 2021 that contained $39.5 billion in assets and represented 40 percent of the HSA market.

The average HSA balance rose from $2,645 at the beginning of 2021 to $3,902 by the end of 2021. This indicates that account holders were more prepared to manage an unexpected medical emergency at the end of the year than at the start.

The analysis found that accounts receiving employer contributions saw higher balances and total contributions. The average balance of these accounts increased by more than 50 percent, from $2640 at the start of 2021 to $4,352 at the end of 2021. Accounts with employer contributions received 14 percent more in total contribution compared to accounts without the benefit.

This suggests employer contributions may help drive account holder engagement with their HSAs.

“As high-deductible health plans and HSAs become further entrenched as an employee benefit offering, it is important for employers and policymakers alike to develop a full understanding of how both are used,” Jake Spiegel, a Health and Wealth Benefits research associate at EBRI, said in the press release.

Over a third of accounts with contributions (36 percent) ended the year with balances of less than $500, while 13 percent had balances higher than $10,000. A mere 2.8 percent of accounts finished the year with zero balance.

Account holder age was tied to HSA utilization, balance, and contribution amounts. The older the account holder, the higher the average balance. Older workers typically earn more than new, younger workers, helping them accumulate higher balances. Older workers are also more likely to have higher healthcare expenses.

Account holders under 25 had an average balance of $870, people between 35 and 44 had an average balance of $2,735, and account holders 65 or older had an average balance of $5,823. Additionally, older account holders were more likely to make contributions to their accounts compared to account holders under 25, the report found.

Almost 8 million HSAs received an employee or an employer contribution in 2021. The average contribution increased with account holder age and peaked among individuals between 55 and 64 at $3,258 before declining among older account holders.

Tenure was also associated with account balances; HSAs that had been open for 15 years had an average balance of $16,233, compared to five-year-old accounts that had an average balance of $6,347.

Account holders who received employer contributions (69 percent) were more likely to withdraw funds compared to those who did not receive employer contributions (47 percent). The average distribution was also larger for people who received employer contributions ($2,009 versus $1,677).

Over half of individuals with HSAs (53 percent) withdrew money from their accounts during 2021. The average distribution was $1,786, but around 34 percent took out less than $500.

Account holders aged 55 to 64 withdrew higher amounts on average ($2,152) than those under 25 ($738). Older account holders also withdrew money less frequently compared to younger people.

Around 60 percent of account holders contributed more than they withdrew from their HSA. Among all age groups, contributions were larger than distributions. Account holders under 25 had the lowest net contributions of $401, while those between 55 and 64 had the highest net contribution at $779.

Similar to prior years, few account holders held investments in assets other than cash in their HSAs. Around 12 percent of account holders invested at least some of their balance in 2021. Invested assets were more common among individuals who receive employer contributions, the report noted.