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A summary of the articles included in the August 2024 edition:
- 2023 Devenir & HSA Council Demographic Survey Findings
- Milliman Reveals Health Care Costs for 65-Year-Olds Retiring in 2024
- InComm Payments Offers a “New Way to HSA” with Launch of InComm Benefits
- HSA Deposit Rate Update – June 2024
- HSA-Like Options For Employees In High Demand, Survey Shows
- Know Which Family Members’ Expenses Are HSA-qualified
2023 Devenir & HSA Council Demographic Survey Findings
Devenir and the American Bankers Association’s Health Savings Account Council released the results of the 4th annual Devenir & HSA Council Demographic Survey and resulting research report. The survey found that the 37 million Health Savings Accounts that existed at the end of 2023 helped cover over 61 million Americans.
Key findings:
- Over 61 million covered by an HSA. Devenir estimates that as of December 31st, 2023, there were 37.4 million HSAs, covering over 61 million people.
- Millennials drive HSA growth. Health savings accounts continue to be embraced by younger consumers. About 30% of accounts at the end of 2023 were held by accountholders in their 30s.
- Older Americans amass significant HSA savings. Accountholders aged 55+ had accumulated over $52 billion in their accounts at the end of 2023 (a 20% increase from the previous year). The average balance for this age group reached $5,739.
- HSAs demonstrate broad adoption. 68% of health savings accountholders live in a zip code with a median household income of less than $100,000.
Milliman Reveals Health Care Costs for 65-Year-Olds Retiring in 2024
The average healthy 65-year-old retiring in 2024 is projected to spend a significant amount on health care over the course of their remaining lifetime, according to the 2024 Milliman Retiree Health Cost Index.
The two most common health care coverage options chosen by Medicare-eligible retirees are Medicare Advantage Part D and Original Medicare with Medigap plus Part D. A healthy 65-year-old man retiring in 2024 with a MAPD plan is projected to spend $128,000 on health care in his remaining lifetime, and a woman with the same coverage is projected to spend $147,000 in her remaining lifetime, according to Milliman.
In order to afford these costs, Milliman projected that a man with a MAPD plan needs to have at least $86,000 in savings and a woman with the same coverage needs at least $96,000 in savings. The Milliman Index projected that this is the amount of savings (net of taxes) needed at age 65 to pay a retiree’s remaining lifetime health care “total spend,” assuming an investment return of 3% per year.
InComm Payments Offers a “New Way to HSA” with Launch of InComm Benefits
InComm Payments announced the launch of InComm Benefits, a new division revolutionizing the employer market with automated and intuitive Health Savings Account (HSA) and Flexible Spending Account (FSA) services. InComm Benefits’ automated solutions potentially drive higher adoption rates and satisfaction by simplifying expense management and encouraging user engagement.
“Many employers struggle with low utilization of HSAs and FSAs, often because their employees believe the accounts are too complex to manage,” said Brian Parlotto, Executive Vice President at InComm Payments. “Our goal is to disrupt that status quo by making it easier for account holders to spend now on essential purchases without losing the benefits of saving for the future.”
HSA Deposit Rate Update – June 2024
As we enter the second half of 2024, HSA interest rates continue their upward trajectory, with increases across all balance tiers. As of June 30th, the average rate for $1,000 balances reached 0.44%, up from 0.42% in December 2023. More substantial gains are seen in higher balances, with $10,000 accounts now averaging 0.55% (up from 0.52%) and $50,000 balances hitting 0.62% (up from 0.57%).
HSA-Like Options For Employees In High Demand, Survey Shows
Both employers and employees are interested in a new type of health account similar to a health savings account (HSA) that would help employees pay for out-of-pocket health care costs.
The Employee Benefit Research Institute (EBRI) and Greenwald Research surveyed workers about their interest in such a tool and found strong enthusiasm, with 55% of respondents indicating they were either very or extremely interested.
EBRI described the potential HSA-like plan as one that would be funded with post-tax contributions and could be paired with any health plan, not just high-deductible plans. Like HSAs, these plans could be funded by both employees and employers, invested in the stock market and follow the worker from job to job.
Know Which Family Members’ Expenses Are HSA-qualified
Question: Whose expenses can I reimburse tax-free from my Health Savings Account?
Answer: You can withdraw funds tax-free from your Health Savings Account to reimburse all qualified expenses that you, your spouse, and your tax dependents incur.
Note that this list may be different from the family members whom you cover on your medical plan. Coverage on your medical plan isn’t relevant when determining whose expenses you can reimburse tax-free from your Health Savings Account. Nor is whether a family member enrolled on your plan is eligible to fund a Health Savings Account. Eligibility to enroll in medical coverage is determined by federal and state laws, insurer rules, and employer choices.
In contrast, the federal tax code alone determines whose expenses you can reimburse tax-free from your Health Savings Account.