HSAs Continue To Grow As Employer-Sponsored Healthcare Benefit
Health Savings Accounts generated significant growth during 2008 while adding large numbers of new covered lives in January 2009.
Information Strategies, Inc.'s (ISI) quarterly assessment of HSA growth once again revealed the steady progress in acceptance of this approach to combining healthcare benefit with retirement planning.
While not complete, ISI's research indicates that there are 7.6 million HSA custodial accounts with an average balance of $1,901. This average balance number remains fairly consistent at this level as the number of new accounts with lower balances outnumbers accounts opened two or more years.
ISI continues to find that one in 10 eligible individuals or families do not open a custodial account.
The funding of first year HSA accounts by employers continues to average 16% with few if any companies funding 100% of the first year's deductible for employees.
In a survey of 1021 businesses across a broad spectrum of employee size. 41% of respondents said they utilized them in their benefits programs. Of this total, 20% reported that their firms had gone to full replacement while 21% offered HSAs as an option.
Almost one in three respondents said they had begun their HSA offering beginning January 1. A majority of these respodents (55%) said they were only offering HSAs as their employees only option.
Business leaders who responded to the survey said that HSA offerings were included in 55% of their first proposals from insurance agents, up from 41% in 2008. Fully three quarters, (78%) said they evaluated an HSA option at some time in the analysis process, up from 55% in 2008.
California, Ohio, Georgia, North Carolina, and Texas had the highest penetration in the study while the northeastern states continue to lag with the exception of Connecticut.
The survey has a margin of error of 4% and included companies from 5 employees to more than 50,000 staff members.
While its survey of HSA accounts is not complete, ISI estimates that more than 7 million Americans are now covered by HSAs.
A study by AHIP, an association of Blues Healthcare insurers, looked at the five biggest HSA banks, comprising 1.1 million accounts from all 50 states and the District of Columbia.
The rate of growth is strong, with 200,000 new accounts opened in 2005, 300,000 in 2006, 400,000 in 2007, and 175, 000 in the first six months of 2008. The age of the account holder is spread evenly with between 10% and 14% in each ten-year age period.
From January to June of 2008, 70% of all accounts received a "personal" deposit and 40% received an employer deposit, 71% had a withdrawal and 86% earned interest. Balances are growing slowly.
The average account had a balance of $663 on 1/1/07. During the course of the year that account received $1,053 in personal contributions, $531 in employer contributions, $1,032 was withdrawn , $39 was earned in interest and $28 was paid in fees, for a year-end balance of $1,195.
Similar activity took place in the first six months of 2008, leaving an average balance of $1,449 in June.
Not surprisingly, balances grow with time.
Accounts opened by 2004 now have an average balance of $3,125, those opened in 2005 have balances of $1,766, those opened in 2006 have $1,736, those opened in 2007 have $1,080.
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