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Small Business Employee Benefits and HR Blog

How Businesses and Their Employees Are Using HSAs: Report

Although the recent Republican proposal to replace Obamacare was withdrawn EBRI Report Shows HSA Use Databefore it could be put to a vote, the GOP has stated that it plans to introduce new health-care legislation down the road.

One item that has featured prominently in its proposals is the health savings account (HSA). If you offer an HSA to your employees, you may wonder how your benefit offerings compare to those of other companies, as well as how your overall health benefits costs stack up against those of your peers. A recent report provides insight into what HSAs look like across the country.

HSA Stats from the Employee Benefit Research Institute

The report, from the Employee Benefit Research Institute (EBRI), analyzed data on HSA balances, contributions, distributions, and other vital statistics collected from a variety of sources and demographics.

Some of the key takeaways include:

  • Between 20 and 22 million policyholders and their dependents are enrolled in high-deductible, HSA-eligible policies.
  • 59 percent of HSAs received an individual or company contribution in 2015. Among these, four-fifths also had a distribution during the year.
  • The average individual HSA contribution was $833.
  • The average beginning balance for HSAs in 2015 was $1,332.
  • The average end-of-year balance was $1,844.
  • Account balances averaged $759 for those under age 25. For people age 65 and older, account balances averaged $3,623.
  • Withdrawals for individuals under age 25 averaged $634. For people between the ages of 55 and 64, withdrawals averaged $2,319. For the 65+ crowd, the average withdrawal was $2,365.

Additionally, 28 percent of companies with fewer than 500 employees offered an HSA in 2015. The numbers were 59 percent and 73 percent for companies with 500+ employees and 5,000+ employees, respectively. Company contributions averaged $434, but the average company contribution for HSAs that received “some employer contributions during the year” was $948.

Source: Employee Benefit Research Institute

Combining an HSA with an HRA

A common question asked by businesses and employees alike is whether it’s possible to combine an HSA with a Health Reimbursement Arrangement (HRA). As we discussed in our FAQ post on the subject, not only is it possible, it’s usually preferable.

With both in place, businesses can make contributions toward their employees’ health insurance cost and medical expenses, and employees can roll over contributions made to their HSA from year to year. Be wary of double dipping, however, and take care to follow all IRS rules for both types of accounts.

Conclusion

HSAs can be an excellent way to reduce health insurance costs. Paired with an HRA, they can deliver the flexibility and broad range of choices today’s employees want while decreasing health benefits costs for businesses. As the EBRI report states, HSAs are projected to grow substantially in upcoming years. Considering how beneficial they are for both businesses and employees, it’s easy to understand why.

Annual Report 2017: Small Business Health Insurance Reimbursement

How does your HSA compare to the national averages? Let us know in the comments below.