HSAs with investment options draw larger contributions and have higher balances

Investment options in health savings accounts (HSAs) are a fairly new and not widely used, but they tend to draw larger contributions and have higher balances where they do exist, according to recent research from the Employee Benefit Research Institute (EBRI). In 2014, just 6.4 percent of HSA owners had used the investment option portion of the account, EBRI noted.

“HSAs often have an investment-account option that allows account owners to invest in not just a money market account, but in mutual funds and other investment vehicles much like they would in a 401(k) plan. Some HSA owners may use the investment-account option as a means to increase savings for retirement, while others may be using it for shorter-term investing,” said Paul Fronstin, director of EBRI’s Health Research and Education Program.

The survey found the following:

• Forty-seven percent of the HSAs with investments were opened between 2005 and 2008, compared with 8 percent among HSAs without investments. Among HSA owners with investments, the average age was 48.5 in 2014, compared with 43 among HSA owners without investments.
• Individuals contributed $2,636 annually on average when they had investments and $1,224 when they did not have investments. Annual distributions for health care claims averaged $1,777 from HSAs with investments, and $1,293 from HSAs without investments.
• End-of-year account balances averaged $10,261 among HSAs with investments, and $1,709 in HSAs without them.

SOURCE: www.ebri.org

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