Health savings account balances down slightly

Analysts cite economic pressure and the rapid growth of new accounts, which tend to carry lower balances.

By Emily Berry — Posted Jan. 31, 2011

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Though more health savings accounts opened in 2010, the amount in each account declined.

The number of HSAs and health reimbursement arrangements continued to grow, as did the overall amount of money in them. In 2010, Americans held $7.7 billion in 5.7 million HSAs and HRAs, up from 5 million accounts with $7.1 billion collectively in 2009.

But in 2010, the average balance in an HSA or HRA dropped slightly from $1,419 in 2009 to $1,355 in 2010, according to the Washington, D.C.-based Employee Benefit Research Institute.

The drop in the average balance could have been from economic pressure, prompting people to contribute less to their accounts or spend more of the money they had set aside for health care, said Paul Fronstin, PhD, director of the health research and education program at the EBRI and author of the January report examining HSA and HRA balances. He said more research needs to be done to find out what is driving the trend.

Because account balances tend to grow over time, the decline in the average balance also could be due to the rapid growth of new accounts, which tend to have lower balances, said Dennis Triplett, chief executive officer of health care services at Kansas City, Mo.-based UMB Financial, one of the largest custodians of HSAs.

He said it's also possible that as more employers, particularly larger ones, offer high-deductible health plans paired with HSAs or HRAs, more middle-income workers will open the accounts, pushing down the average balance.

Despite evidence in the EBRI's findings that healthier people have higher balances in their HSAs and HRAs, it's not as clear that staying healthy and being cost-conscious mean they have more money socked away in HSAs or HRAs.

Fronstin's research didn't find a significant correlation between most kinds of cost-conscious behavior -- such as budgeting health care services and checking the price of a service before scheduling it -- and building up a big HSA balance.

There was a significant difference in the average balance for people who asked for generic medicines instead of brand-name drugs, but rather than translating to a higher balance, those account holders tended to have less money in their accounts.

One explanation for these findings may be that HSA and HRA holders are healthier and don't need to research physician and hospital quality and cost data rigorously. The wide availability of such information also may mean that the effect of doing that research is insignificant, Fronstin said.

"Those without an account have just as much access to it as those with an account," he said. "If an insurance company is offering this information, they're offering it to everybody."

Health status had some effect, but not a dramatic one, on account balances. Smokers and the obese tended to have slightly smaller account balances, but the differences were not statistically significant. However, respondents who said they had one of eight listed chronic diseases did have significantly lower balances than those without such conditions.

The EBRI survey found that older account holders had higher balances, men had higher balances (though the difference disappears between men and women 55 to 64 years old), minorities held more in their accounts than their white counterparts, and higher education levels and household income correlated with higher account balances.

Triplett said he believes that HSAs will benefit workers over time by encouraging them to stay healthy and search for value, all with the aim of holding on to the money they save on health care. When more accounts age a few years, the average balance may rebound.

"I think it's going to take a longer time," he said. "It will be borne out over a number of years, not in one, two or three."

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Health savings growth levels off

After a growth spurt, the rate of change in the amount of money held in health savings accounts and health reimbursement arrangements is starting to slow. Total assets and number of adults ages 21-64 with an HSA or HRA:

(in millions)
(in millions)
2006 $835.4 1.2
2007 $3,037.0 2.3
2008 $5,697.1 4.2
2009 $7,094.8 5.0
2010 $7,721.9 5.7

Note: As defined by the EBRI, both an HSA and HRA allow employees to set aside money for health care expenses tax-free and roll over funds from one year to the next.

Source: "Health Savings Accounts and Health Reimbursement Arrangements: Assets, Account Balances, and Rollovers, 2006-2010," Employee Benefit Research Institute, January (link)

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Savings up, then down

People with HSAs and HRAs held less in the accounts in 2010 than in 2009, on average, after years of steady growth.

Average HRA
or HSA account balances
2006 $696
2007 $1,320
2008 $1,356
2009 $1,419
2010 $1,355

Source: "Health Savings Accounts and Health Reimbursement Arrangements: Assets, Account Balances, and Rollovers, 2006-2010," Employee Benefit Research Institute, January (link)

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