Health Savings Account Blog

Family Health Savings Account participation was also evaluated and found to have increased in Q1; the family Health Savings Account enrollee was 45 years old and contributed an average of $239 each month – a figure that increased from an average contribution of $206 per month in the 4th Quarter of 2008. Employer contributions to family Health Savings Account plans increased to $266 from $133 in the previous quarter. The average ages for family Health Savings Account participants remained the same for each quarter.

“Consumers enrolled in CDH plans demographically are very similar to consumers of traditional health care,” noted Vik Kashyap, CEO of Canopy Financial. “Consumers are clearly using these accounts for saving towards long-term care needs and even retirement.”

Individual Health Savings Account balance averages in the 1st Quarter of 2009 were $960, which was an increase from $928 in the 4th Quarter of 2008 and from $697 for the 1st Quarter first-quarter 2008. Family Health Savings Account balances increased to $1,720 from $1,600 in the previous quarter and from $1,419 in 1st Quarter of 2008.

Kashyap says the trend in increasing balances is important; “The most significant thing we have noticed is that even in a recession economy, both employers and consumers continue to make contributions to and invest in CDH accounts, which supports the contention that CDH products have become a key/integral component of employer-sponsored health care, and that contributions in many ways mimic those made to 401(k)s in which people invest a little bit each month into these accounts in an effort to accumulate long-term wealth/funds for long-term medical needs.”

By comparison, average balances for Health Investment Accounts (HIAs) varied. While the average HIA balances for families increased by 5% to $10,681 in the 1st Quarter of 2009 from $10,178 in the 2008 4th Quarter, the average HIA balances for individual account holders dropped by 2% to $8,002 in the 1st Quarter of 2009 from$8,148 in the 4th Quarter of 2008.

When understanding the data his company collected, Kashyap points to the importance of the average dollar amounts invested in health investment accounts. “If you look at the report, I think these numbers would be surprising to most in both health care and financial services for how high these account balances on average are,” he said.

As savings increased, spending from Health Savings Accounts was down in 2009. The average monthly expenses for the 1st Quarter of 2009 were $81, compared to $83.54 from the previous quarter. The average monthly expenses for family Health Savings Accounts was $103, down from $108.19 the previous quarter. Hospital expenses contributed to the monthly expenses for both individual and family Health Savings Account holders. Other expenses included dental services, vision expenses, and lab/diagnostic tests.

“The most important take-away for employers is the dollar values held in both HSAs and HIAs, and the fact that their employees are using these accounts not only as savings vehicles for long-term medical expenses, but ultimately towards retirement,” said Kashyap. “Additionally, as their employees increasingly use these accounts to manage their health care expenditures,…they are becoming much more informed/empowered consumers of health care services, which will play a key role long term in reducing overall health care costs of an organization and the costs associated with managing employer-sponsored health care.”

Demand for CDHP that provide Health Savings Accounts is Expected to Rise

Kashyap predicts that there will be an increase in demand for healthcare solutions that offer Health Savings Accounts. “We expect to see not only more employers offering CDH products to their employees, but more employers/consumers demanding CDH products as their value in terms of reducing cost of health care, and as repositories for long-term wealth accumulation being increasingly apparent and prevalent,” he said.