HSAs Reach Record Balances, Low Levels of Investments

While retirement plan professions tout health savings accounts’ tax advantages for long-term savings, most people continue to use their HSAs for short-term spending, according to a recently published report by the Employee Benefit Research Institute.

Looking at a database of 13 years of HSA history and activities, more than half (56%) of account holders took distributions and only 18% of account holders invested in assets other than cash, according to the report, “Trends in Health Savings Account Balances, Contributions, Distributions and Investments, 2011–2024.”

HSA adoption is rising, as more than 40% of the accounts in EBRI’s database were opened between 2022 and 2024. However, during the same period, the percentage of enrollees in high-deductible health plans, which offer HSAs, decreased to 51.9% in 2024 from 57.9% in 2022 among those with private sector health coverage and employee-only coverage, according to the Medical Expenditure Panel Survey-Insurance Component.

The report showed the average HSA balance was $5,532 in 2024—the highest level on record—up from $4,747 in 2023. Balances remain much smaller than out-of-pocket maximums in the high-deductible health plans that offer HSAs, which in 2024 had averages of $8,050 for individual coverage and $16,100 for family coverage.

According to EBRI, the average employee contribution in 2024 was $2,308, and the average employer contribution was $727. That fell short of the 2024 cap for HSA contributions, which was $4,150 for individuals and $8,300 for family coverage (currently at $4,400 and $8,750, respectively.) Adjusting for inflation, both employer and employee contributions were higher in the 2010s, suggesting that average contributions have failed to keep pace with steadily rising contribution limits.

Of account holders who took distributions, the average in 2024 was $1,870—slightly higher than the 2023 average of $1,801, but lower than the 2010s, adjusting for inflation.

The report found that consumers who had HSAs longer tended to accumulate larger balances, to contribute more annually and to invest more. The percentage of HSA account holders who invested in assets other than cash increased for eight consecutive years, to 18% in 2024 from 5% in 2017.

Older accounts with invested assets had a higher average percentage of those assets invested. Accounts started between 2020 and 2024 had from 57% to 65% of assets invested, while accounts started in 2016 or earlier had 78% to 92% of assets invested.

“People use their HSAs differently the longer they have their accounts,” said Paul Fronstin, EBRI’s director of health benefits research, in a statement. “Those behaviors can help account holders prepare not only for unexpected healthcare expenses today, but also for potentially significant healthcare costs in retirement.”