Skip to main content

You are here

Advertisement

What Participants (Still) Get Wrong About HSAs

A new survey finds that individuals like health savings accounts (HSAs), but misconceptions remain.

The Fidelity Investments report notes that of those in an HSA-eligible health plan, 8 in 10 are satisfied with it. Specifically:


  • 76% are satisfied with the ease of using their HSA for medical expenses;

  • 77% are satisfied with the quality of their health care coverage; and

  • 77% are satisfied with how the plan helps them manage their health care costs.


That said, 39% of people believed they lost unspent HSA contributions at year-end, presumably confusing them with flexible spending accounts, or FSAs. In fact, unspent contributions to HSAs roll over from year to year.

HSAs enable people to put aside money for today’s health care expenses while investing for medical costs they may incur in retirement. (Fidelity estimates that couples retiring today will need an estimated $260,000 for health care costs during retirement.)

The accounts are paired with high-deductible health plans (HDHPs), which often have lower monthly insurance premiums than traditional health plan offerings, and include three key tax benefits: contributions go in tax-free, balances grow tax-free, and savings can be withdrawn tax-free for medical costs.

Despite the long-term potential investment of these accounts, a recent report by Devenir found that, nationally, 15% of all HSA assets are invested outside of cash. Fidelity notes that of assets held in Fidelity HSAs, more than 21% are invested. Additionally, they note that Fidelity HSAs rose 50% during the past year to surpass $2 billion, with 657,000 individual account holders, a growth of 46% in one year.

The U.S. House of Representatives passed a bill earlier this year that would nearly double the current contribution limits for HSAs, as well as broadening the scope of expenses that could be paid from those accounts.

For more on HSAs, see “5 Things You May Not Know About HSAs” and “The “S” Stands for Savings.”

Advertisement