Health Savings Accounts Are Picking Up Serious Steam
  • Industry Trends & Insights

Health Savings Accounts Are Picking Up Serious Steam

For employees enrolled in a high-deductible health plan (HDHP), health savings accounts (HSAs) can be a real game-changer.

One on level, HSAs allow for the contribution of pre-tax dollars to pay for qualified health care expenses throughout the year, providing a cost-effective way for employees to manage their out-of-pocket responsibilities.

And on another level, HSAs are a powerful long-term savings vehicle, due to the fact that all funds can roll over from year to year and accumulate tax-free interest. They can essentially act like a 401(k) plan to save for health care costs in retirement, with the added benefit that withdrawals are tax-free – for qualified medical expenses – at any time.

Based on data from the Benefitfocus 2018 State of Employee Benefits report, employees are catching on to these benefits in a big way.

Participation in HSAs among eligible HDHP subscribers soared by more than 60 percent year over year – from roughly 50 percent in 2017 to 81 percent in 2018 – with dramatic increases observed across every age group. Millennials were especially eager to adopt, nearly doubling their HSA enrollment rate from last year.


The report shows that HSA contributions are also up year over year—4 percent for single coverage and 3 percent for family coverage. Those increases both outpace the respective increase to the IRS contribution maximum, which grew 1.5 percent to $3,450 for single coverage and a little over 2 percent to $6,900 for family coverage.

Millennials have made significant savings gains in recent years, contributing 13 percent more to single-coverage accounts and 15 percent more to family-coverage accounts since 2016.

Employees face a difficult decision when it comes to HSAs, as pulling additional money out of their paychecks to contribute to these accounts may not seem very appealing to most. But at the same time, these accounts can be crucial in helping employees navigate the world of consumer-driven health care.

Based on the significant increases we observed in HSA participation this year, employees are getting that message loud and clear.

For more insight into emerging employee benefit trends, download the full 2018 State of Employee Benefits report!