By the Numbers
MARCH 20, 2017
$37 billion — Assets invested in health savings accounts
According to research released in February, HSAs now number more than 20 million and hold some $37 billion in assets. Denevir, a leading provider of investment solutions for HSAs, notes that this represents a year over year (as of December 31, 2016) increase of 20% in accounts and 22% in assets. The average account balance is $14,971.
HSAs enabled individuals covered by high-deductible health plans to receive tax-preferred treatment of money saved for medical expenses. Tax-deductible contributions and the potential for tax-free growth are just two of the benefits they offer. In addition, withdrawals are not taxable if the money is used to cover qualified expenses, and account holders have the option to invest their HSA assets.
Unlike flexible spending accounts, health savings accounts have no “use-it-or-lose it” restrictions. That means that any money remaining in an account can be rolled over from one year to the next, and a growing number of savvy investors appear to be doing just that.
“We often think of efficient allocation of dollars and positive retirement outcomes only in the context of 401(k) plans,” says Ryan Tiernan, national accounts manager at Capital Group. “As HSAs enter the defined contribution and consumer-driven space, we recognize them as a practical tool in combating the largest cost Americans face in retirement: health care.”
Companies are increasingly offering HSA-compatible high-deductible health plans to their employees as they seek to curb costs. The vast majority encourage enrollment by contributing to their employees’ HSAs. For 2017, the annual HSA contribution limit — including those made by employers — is $3,400 ($6,750 for a plan that covers a family).
“As health coverage continues to be more consumer oriented, individuals are becoming more engaged and invested in managing their health and their health care dollars,” explains Eric Remjeske, president and co-founder of Devenir. The company’s research projects that HSA assets will exceed $50 billion by 2018, and that individual accounts could number over 27 million.
Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.
Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing.
Investors should consult their tax or legal advisors.