25 Million Savers Now Use This Tool — Are You Missing Out?

25 Million Savers Now Use This Tool — Are You Missing Out?
Photo by AshTproductions / Shutterstock.com

The number of health savings accounts held by Americans continued its quiet climb last year.

It exceeded 25 million at the end of 2018 — an increase of 13% from the end of 2017, according to a report by Devenir Group, a firm that serves the HSA investment industry.

This is just one of several HSA statistics that are trending upward, though. Devenir also reports:

  • More contributions by individuals: Account holders contributed almost $33.7 billion to their HSAs in 2018, a 22% increase compared with 2017.
  • More contributions by employers: Among HSAs that received employer contributions last year, the average employer contribution was $839, up from $604 in 2017.

What is a health savings account?

An HSA is a type of tax-advantaged account designed to hold money for medical expenses. Despite its name, it can be either a savings account or an investment account, assuming you use an HSA custodian such as Lively that enables you to invest your contributions.

As is the case for other tax-advantaged accounts, you can deposit only a certain amount of money in an HSA each year.

You can deposit pretax earnings in an HSA, meaning you get a tax deduction for contributions in the tax year for which you make them. Additionally, your deposits grow tax-free, and you can withdraw money tax-free, provided that you use it for qualifying medical expenses.

In other words, it’s possible to never pay taxes on money that goes through an HSA.

Not everyone is eligible for an HSA, however. They are meant for folks with high-deductible health insurance plans. For the 2019 tax year, the IRS defines such plans as having annual deductibles of at least:

  • $1,350 for self-only coverage
  • $2,700 for family coverage

HSAs as retirement accounts

As we note in “3 Reasons You Need a Health Savings Account — and How to Open One Today,” any money you put in an HSA — and any interest or investment gains that money earns — remains in the account year after year if you don’t spend it.

This is one of the advantages an HSA has over a health flexible spending account (FSA). And it means you can use an HSA like an extra retirement account — a tax-free one if you spend the money on qualified medical expenses. All you have to do is contribute to an HSA during your working years and not touch it until your golden years.

That’s easier said than done, of course. But even if you need to withdraw funds from your HSA annually, it’s likely worth it for you to become the next person to take advantage of this tool.

Even if you don’t allow your HSA contributions to sit and grow, you will still save money by paying for medical expenses with tax-free dollars. And that just might enable you to contribute a little more money to your actual retirement account.

What’s your take on or experience with HSAs? Share it below or on our Facebook page.

Find cheaper car insurance in just minutes

Getting a better deal on car insurance doesn't have to be hard. You can have The Zebra, an insurance comparison site compare quotes in just a few minutes and find you the best rates. Consumers save an average of $368 per year, according to the site, so if you're ready to secure your new rate, get started now.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
10 Ways Anyone Can Earn More Income
10 Ways Anyone Can Earn More Income

Looking for additional cash? Here are a bunch of options that are accessible to anyone with internet access.

2-Minute Money Strategy: How Should I Invest My Retirement Savings?
2-Minute Money Strategy: How Should I Invest My Retirement Savings?

If retirement is on the horizon, you can’t afford to take too much risk, but you also need to make as much as possible. Here are your options.

10 Tools You Need for Financial Stability
10 Tools You Need for Financial Stability

Have these tools and accounts in place so you can weather whatever comes your way.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started


Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.

Trending Stories