Balances are expanding in the health savings accounts (HSAs) provided for employees who participate in consumer-driven health plans, suggesting HSAs may be gaining traction as a way to save for health expenses in retirement. HSA balances are still small, though, and a far cry from what people will need in retirement.
J.P. Morgan Treasury Services reports that in 2011, the average balance of the 900,000 HSAs that it administers grew 4%, to $1,547, and at year-end, 36% of accounts had balances of more than $1,000.
Elena Szymanski, executive director of J.P. Morgan Treasury Services, notes that 74% of account holders contributed more to their account than they paid out last year. “That indicates a trend toward being able to save and use this as a savings vehicle,” Szymanski says.
J.P. Morgan also offers HSA holders an investment line-up, similar to a 401(k) plan, and in 2011, investment accounts grew more than 25%.
An Employee Benefit Research Institute (EBRI) study of HSAs and health reimbursement arrangements—another type of account tied to consumer-driven health plans—found there were 8.4 million such accounts in 2011 with $12.4 billion in combined assets. The EBRI study shows 46% of the accounts contained more than $1,000 in 2011.