Data & Research June 13, 2025

EBRI Finds Increased Rate of Withdrawals From HSAs in 2023

Despite higher spending on health care, HSA account balances continued to increase over the course of the year.

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One-third of health savings account holders withdrew more than they contributed, despite average end-of-year HSA balances ending higher than average beginning-of-year balances in 2023, according to an Employee Benefit Research Institute study.

Out-of-pocket patient spending on health care increased in 2023, rising 7.5% over 2022.

The report summarizing the study, “Health Savings Account Balances, Contributions, Distributions, and Other Vital Statistics, 2023: Evidence From the EBRI HSA Database,” was based on EBRI’s HSA Database, which comprises 14.5 million account holders.

“HSA-eligible health plans are an important part of the health benefits landscape. Yet, there is little empirical research about how HSAs are used by workers,” said Jake Spiegel, one of the co-authors of the report and a senior research associate for health and wealth at EBRI, in a statement. “Such analyses can not only inform strategies for plan sponsors wishing to help workers better utilize their HSAs, but also help HSA providers better position their offerings, as well as help policymakers craft sound policy.”

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The report stated that one of the largest advantages HSAs offers is the ability to invest assets within the accounts and let investments grow on a tax-free basis. However, the report’s analysis revealed that only 15% of account holders invested their HSAs in assets other than cash.

In addition, only 43% of account holders received an employer contribution. Accounts that received an employer contribution had higher total contributions and were more likely to invest.

More than half of the HSAs in EBRI’s database had a distribution in 2023, and the average distribution amount was $1,801, according to the report.

On average, EBRI found older accountholders contributed more to their HSAs, had higher balances, more frequently took distributions and had a higher likelihood of investing at least some portion of their HSA in assets other than cash.

The Republican tax bill making its way through Congress includes several provisions that would expand HSAs.

The EBRI HSA Database includes $48.4 billion in assets.

The Markets June 12, 2025

Plan Sponsors Reevaluating DB Plan Terminations Amid Surplus Increases

A Mercer survey finds CFOs are looking at plan design changes or risk transfers, in lieu of walking away from the plans entirely.

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Fewer plan sponsors are considering terminating their defined benefit plans as they consider other risk management strategies such as plan design changes or limited risk transfers.

Half of plan sponsors do not intend to terminate their DB plans, up from 36.7% in 2023 and 28.3% in 2021, according to Mercer’s 2025 CFO Survey, shared in a webinar on Wednesday.

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The survey is based on responses from 173 chief financial officers and senior finance executives.

“A lot of the plans who had planned to terminate did so,” said Matt McDaniel, who leads Mercer’s U.S. pension strategy and solutions team. “We’re now up to … half of plans anticipating staying in the pension ecosystem for a long time, and the other half looking to terminate in the next five to 10 years. With more overfunded plans than ever, managing pension surpluses that have emerged has become the key theme in terms of how plan sponsors are thinking about dealing with those types of plans.”

The 100 largest corporate DB plans were 104.1% funded on an accounting basis, with a surplus of $51 billion as of March 31, according to Milliman.

As surpluses have increased, plan sponsors have tapped into alternative measures other than termination to unlock the savings, McDaniel said.

“We’ve seen sponsors move DC contributions into a DB plan to provide similar contributions; we’ve seen plan sponsors do retiree medical transfers of surplus assets to cover health benefits for employees; we’ve seen plan sponsors do somewhat creative partial transactions—where that may be to spin off a portion of the plan, terminate that with some surplus, leave a portion of the plan behind, perhaps for employees that are still accruing benefits,” he said. “The rules do require a little bit of creativity in terms of different ways to access some of that surplus, and sometimes it’s a little bit of a work-around to try to get there. But there are lots of good activities.”

More than 50% of respondents said they are eyeing plan design changes for 2025, with an increasing interest in hybrid models and cash balance plans to offset investment risk and interest rate volatility, according to the survey.

According to survey results shared during the webinar, 37.6% of respondents said they had implemented a hybrid pension plan design that eliminates investment risk and interest rate risk for the company, up from 32.2% in 2023.

Investment risk and interest rate risk were the two main factors that plan sponsors listed for why they terminated their plans, at 66% and 48.9%, respectively, according to the survey.

Meanwhile, risk transfer continues to dominate strategic discussions. More than 70% of organizations plan to offer lump-sum payments to some portion of their plan beneficiaries in the next two years, while more than 60% are exploring or have already executed retiree obligation transfers to insurers via annuity purchases, sometimes called pension risk transfers.

Organizations are also moving to de-risk their investment portfolios, with 70.1% reporting they have implemented dynamic de-risking strategies, an increase of nearly 10 percentage points from 2023. Additionally, 44% have boosted allocations to fixed-income assets to stabilize their funded status.

Yet internal confidence remains a hurdle: Fewer than 40% of CFO respondents reported high confidence in their in-house capabilities to manage DB plan complexities. Many cited time and resource constraints, prompting a growing reliance on analytics, dashboards and data-driven tools to inform decisions and streamline operations.

“Plan sponsors are thinking about all the options that are on the table,” said Valarie Dion, a senior pension strategist at Mercer, during the webinar. “With higher funded status, you have a lot more options on the table.”

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