With health care costs skyrocketing over the past several years, it’s no surprise employers and employees are turning their attention to health savings accounts.
A recent study from the Plan Sponsor Council of America shows that HSAs are continuing to gain in popularity and explores trends in how these accounts are positioned by employers as well as how they’re used by employees.
According to the study, nearly 60% of workers are enrolled in a health option that qualifies for an HSA; 88% of eligible employees had an HSA in 2022; and 80% were contributing to their HSA, up from 72.8% in 2021.
Andrew Herzog, certified financial planner at The Watchman Group in Plano, Texas, said when he had a high-deductible health plan, he contributed to a family HSA.
“In fact, I maxed it out,” Herzog said. “The triple tax-advantaged nature is irresistible: immediate tax deduction, tax-free growth each year, and tax-free withdrawals if used for qualified medical expenses. I treated it as another retirement account.”
The average participant contribution last year was $2,323, which was down from the last couple of years, the study found. However, the average HSA balance was $6,130 up from $4,237 in 2020.
“HSAs are a real struggle to understand,” said Jan Valecka, principal at Valecka Wealth Management. “At first, [clients] think it’s the same as a flex plan, where you lose the money if not used by the end of the year. Employers need to do a better job of explaining the difference between HSA and FSA.”
Three-quarters of employers contribute to employees’ HSA. Of those that do, more than half provide a set amount based on the coverage level while less than 10% match employees’ contributions to the accounts.
“Employers can play an important role
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