Health savings accounts (HSAs) carry significant perks due to their triple tax benefits, with contributions being tax-deductible, funds growing tax-deferred, and distributions tax-free on qualified medical expenses. An interesting trend noted from the Employee Benefit Research Institute (EBRI) data of 2023 revealed that older HSA accountholders, specifically aged between 45 to 64 years, maintain a higher average HSA balance. The data showed that individuals aged between 45 to 54 years had an average HSA balance of $5,674, while those aged between 55 to 64 years had a higher average balance of $8,339.
The higher savings among the older holders can potentially be attributed to their higher earnings, enabling them to make larger contributions and subsequently larger withdrawals due to their increased health care needs. Simultaneously, their longer presence in the workforce allows more time for savings accumulation.
Another interesting fact highlighted was that only about 15% of all accountholders take advantage of the provision of investing HSA funds into assets.
On the other hand, younger account holders, especially those below 25, who tend to be generally healthier and hence require less spending on healthcare, had lower contribution levels with an average of $1,100.
For individuals considering contributing more to their HSAs, it is crucial to remember there are pre-tax annual contribution limits set by the IRS, and HSA contributions also require possession of a high-deductible health plan (HDHP). The findings further revealed accountholders under 25 made withdrawals averaging $804, whereas those aged 55 to 64 withdrew an average of $2,647, pointing to the higher health care needs of older accountholders.