The HSA in its 20th year: Trends to watch

As the Health Savings Account (HSA) approaches its 20th anniversary, let’s check in on the latest industry metrics and what they reveal about the impact of this tax-advantaged1 tool on employees’ health savings goals.

According to Devenir’s midyear report (as of June 30, 2023):

1 Potential Tax Benefits: You can receive federal income tax-free distributions from your HSA to pay or be reimbursed for qualified medical expenses you incur after you establish the HSA. If you receive distributions for other reasons, the amount you withdraw will be subject to income tax and may be subject to an additional 20% tax, unless an exception applies. Any interest or earnings on the assets in the account are federal income tax-free. You may be able to claim a tax deduction for contributions you, or someone other than your employer, make to your HSA directly (not through payroll deductions). In addition, HSA contributions may reduce your state income taxes in certain states. Certain limits may apply to employees who are considered highly compensated key employees. Bank of America and Merrill Lynch recommend you contact qualified tax or legal counsel before establishing an HSA.

Source: Devenir Research, 2023 Midyear HSA Market Statistics & Trends, September 21, 2023.