Having recently celebrated its 12th birthday, the Health Savings Account (HSA) is more popular than ever. During the first half of 2015, HSA usage grew by a whopping 42 percent compared to the same period during 2014, according to a study by Bank of America. While the Baby Boomer generation carries the highest HSA balances and has the fastest balance growth, Millennials account for 33 percent of overall Health Savings Account enrollment.
The 2015 Devenir Year-End HSA Research Report, a comprehensive semi-annual survey of the HSA market, finds that:
- HSA assets have crossed the $30 billion threshold. The number of HSA accounts rose to 16.7 million, holding almost $30.2 billion in assets, a year over year increase of 25 percent for HSA assets and 22 percent for accounts for the period of December 31, 2014 to December 31, 2015.
- HSA investments continue to grow. HSA investment assets reached an estimated $4.2 billion in December, up 33 percent year over year. The average investment account holder has a $14,035 average total balance (deposit and investment account).
- Health plans are the largest driver of growth. During 2015, health plans continued as the leading driver of new account growth, accounting for 36 percent of new accounts.
The benefits of owning an HSA are part of the reason why the savings accounts are thriving. HSA account holders enjoy tax-free contributions (as long as the funds are used for medical expenses) and they earn tax-free interest. In addition, once the account holder reaches retirement age, he or she can use the funds like a 401(k). Plus, there is no “use it or lose it,” as there is with many Flexible Spending Accounts (FSAs), and with HSAToday®, account holders enjoy one of the lowest investment thresholds in the market at $1,000.
When considering the tremendous account growth and financial findings outlined above, it is clear that there is no better time to offer an HSA than right now. With more employers offering HSAs as part of benefits packages, and as Millennials gain traction in the workforce beyond entry-level positions, the HSA market is ripe for continued and sustainable growth.
The statistics show that the future of HSAs is today!