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A summary of the articles included in the March 2025 edition:
- 401(k), HSA Balances Increased Through 2024
- House Bill Could Let Workers Pay For Toothpaste With FSAs and HSAs
- How to Become a Millionaire With a Health Savings Account
- InComm Benefits Introduces Cash Back for HSAs
- Bill Would Expand Treatment Options Under HSA-Qualified High Deductible Health Plans
401(k), HSA Balances Increased Through 2024
Buoyed by bigger employee contributions, both 401(k) and health savings account (HSA) balances were up significantly at the end of 2024, compared to year-end 2023.
The average 401(k) account balance at year-end 2024 was approximately $100,300, up 16% compared to the average $86,000 balance at year-end 2023, according to analysis from Bank of America. And the average HSA account balance at the end of 2024 was $5,000, up year-over-year from $4,400.
The average 401(k) contribution rate was 6.6%, while 21% of participants increased their rate in the last quarter of the year, up from 9.7% of participants in the third quarter — a trend led by Millennials.
Meanwhile, employees also got more serious about their HSAs. This is a positive sign as industry experts tout the savings vehicle — with its triple-tax advantages — as a smart way for employees to save for and pay medical bills as well as saving for their post-work years. In Q4, on average, Generation X employees contributed the most to their HSAs — nearly $2,000 — while Millennials were most likely to have saved their HSA funds.
House Bill Could Let Workers Pay For Toothpaste With FSAs and HSAs
A new House bill could close a gap in the flexible spending and health savings account eligibility rules: It would let FSA and HSA holders use the accounts to pay for over-the-counter oral health products.
If the bill passes and works as the supporters expect, workers could use FSA money or HSA money to pay for items such as toothpaste, ordinary toothbrushes and expensive electric toothbrushes.
Because implementing the bill would reduce federal income tax revenue, it comes under the jurisdiction of the House Ways and Means Committee.
How to Become a Millionaire With a Health Savings Account
It’s possible to amass $1 million in special health savings accounts to use in retirement, a new analysis finds, with several big caveats.
You have to start young, contribute the maximum each year and leave the money untouched for decades instead of spending it on medical needs.
The new analysis by the Employee Benefit Research Institute, a nonprofit group, assumes that at age 25, a saver begins contributing the maximum allowable amount each year ($4,300 for an individual in 2025 — the amount is tweaked annually for inflation — and an additional $1,000 for people 55 and older) and continues those contributions through age 64 with no withdrawals, “regardless of whether the individual uses any health care services.” It also assumes the funds are invested and earn a 7.5 percent rate of return.
InComm Benefits Introduces Cash Back for HSAs
InComm Benefits announced that its Health Saving Account (HSA) solution will offer 2% Cash Back on all eligible transactions. Launching in January 2025, this marks the first time that an HSA will offer Cash Back, encouraging account holders to use their HSA card so they avoid missing eligible expenses and get more value from their employer-sponsored benefits.
“Consumers often miss opportunities to use their HSA because they are not aware of expenses that qualify for reimbursement,” said Brian Parlotto, Executive Vice President at InComm Payments. “We are introducing Cash Back to give account holders an opportunity to receive value with every purchase they make using their HSA. By rewarding their use of the card and account, we aim to help them reduce the chance of missing out on eligible expenses. It’s all possible thanks to the automated technology powering our solution.”
Bill Would Expand Treatment Options Under HSA-Qualified High Deductible Health Plans
House lawmakers have introduced a proposed bill to expand chronic disease treatment options covered by high deductible health plans, such as for individuals with high blood pressure or asthma.
The Chronic Disease Flexible Coverage Act would allow employers who offer HDHP coverage the option of including pre-deductible coverage for certain healthcare services that treat common chronic illnesses, according to a summary of the legislation.
The bill by Reps. Vern Buchanan (R-Fla.) and Jimmy Panetta (D-Calif.) would codify IRS Guidance issued under the Trump Administration in 2019. The legislation would allow employers to offer pre-deductible coverage of 14 chronic healthcare services for employees using an Health Savings Account-qualified HDHP, including beta-blockers for patients with congestive heart failure, blood pressure monitors for patients with high blood pressure, glucometers for patients with diabetes and inhalers for patients with asthma. It also would allow the list of services to be expanded, if necessary.