Forget piggy banks—the real money is growing in Health Savings Accounts, as proven by 36.2 million accounts holding a record $127.7 billion in 2023.
Key Takeaways
- In 2023, the total number of Health Savings Accounts (HSAs) reached 36.2 million, marking a 5.5% increase from 2022.
- HSA assets under management grew to $127.7 billion in 2023, up 14.2% year-over-year.
- The HSA market size was valued at $28.4 billion in 2022 and is projected to grow at a CAGR of 12.5% through 2030.
- In 2023, 28% of U.S. adults aged 18-64 had an HSA, up from 24% in 2022.
- 45% of HSA holders were enrolled in HDHPs through employers in 2023.
- Female participation in HSAs reached 52% of total accounts in 2023.
- Average annual HSA contributions per account holder were $1,412 in 2023.
- Total employee contributions to HSAs reached $23.6 billion in 2023.
- Employer contributions averaged $578 per account holder in 2023.
- 68% of HSA withdrawals were for qualified medical expenses in 2023.
- Total qualified withdrawals from HSAs totaled $34.8 billion in 2023.
- Average withdrawal amount per HSA was $1,230 in 2023.
- HSA market expected to grow at 13.2% CAGR to $52.3B by 2030.
- By 2025, invested HSA assets projected to reach $75 billion.
- HDHP enrollment forecasted to hit 45% of covered workers by 2026.
The HSA industry is experiencing rapid growth in accounts, assets, and market value.
Account Holders and Participation
- In 2023, 28% of U.S. adults aged 18-64 had an HSA, up from 24% in 2022.
- 45% of HSA holders were enrolled in HDHPs through employers in 2023.
- Female participation in HSAs reached 52% of total accounts in 2023.
- 19 million individuals with family HDHP coverage had HSAs in 2023.
- Gen X held 42% of all HSA accounts, totaling 15.2 million in 2023.
- 62% of HSA account holders were employed full-time in 2023.
- Self-employed individuals represented 8% of HSA holders, 2.9 million accounts.
- Average age of HSA holder was 45 years in 2023.
- 35% of large employer (500+ workers) employees had HSAs in 2023.
- Hispanic Americans held 12% of HSAs, 4.3 million accounts in 2023.
- 71% of HSA families had at least one account holder contributing in 2023.
- Boomers accounted for 22% of new HSA openings, 460,000 accounts in 2023.
- 55% of HSA holders were married or in a domestic partnership in 2023.
- Small business employees (under 50 workers) HSA adoption was 22% in 2023.
- 14% of HSA holders were retirees or over 65 in 2023.
- Urban residents held 68% of all HSAs, 24.6 million accounts.
- Average household income of HSA holders was $92,400 in 2023.
- African American HSA participation rose to 9% of total, 3.3 million.
- 48% of HSA holders had college degrees or higher in 2023.
Account Holders and Participation Interpretation
America is finally realizing that the secret to not being financially ruined by a sprained ankle is a tax-advantaged savings account, as evidenced by nearly a third of working-age adults now clutching these accounts like a healthcare lifeline, with the typical holder being a married, college-educated, 45-year-old full-time employee in a city, who is statistically likely to be a woman, part of Generation X, and earning just shy of six figures, all while their employer quietly thanks them for choosing a high-deductible plan.
Contributions and Balances
- Average annual HSA contributions per account holder were $1,412 in 2023.
- Total employee contributions to HSAs reached $23.6 billion in 2023.
- Employer contributions averaged $578 per account holder in 2023.
- 78% of HSA holders made contributions in 2023, totaling $28.1 billion from individuals.
- Average year-end balance for HSAs was $3,530, with invested accounts at $12,100.
- Catch-up contributions (age 55+) totaled $2.4 billion in 2023.
- 42% of HSAs had balances over $5,000 at year-end 2023.
- Median HSA balance was $2,100 for individual coverage accounts in 2023.
- Total rollover contributions amounted to $15.7 billion in 2023.
- HSAs with balances grew to 75% of total accounts in 2023.
- Average employer contribution for family coverage was $1,284 in 2023.
- 65% of contributions were made pre-tax via payroll in 2023.
- High-balance HSAs (>$50k) averaged $112,300 per account in 2023.
- Total contributions increased 11% from 2022 to 2023, reaching $51.2B.
- 29% of account holders maxed out individual contribution limits ($3,850) in 2023.
- Average balance for millennial HSAs was $1,890 in 2023.
- 55% of HSAs received employer contributions in 2023.
- Year-end median balance across all HSAs was $1,820 in 2023.
Contributions and Balances Interpretation
Americously, the average American is painstakingly building a medical nest egg, with most accounts looking more like a cautious rainy-day fund than a robust investment portfolio, proving we're still more inclined to save for a deductible than to dare dream of retiring on our health savings.
Industry Trends and Projections
- HSA market expected to grow at 13.2% CAGR to $52.3B by 2030.
- By 2025, invested HSA assets projected to reach $75 billion.
- HDHP enrollment forecasted to hit 45% of covered workers by 2026.
- Robo-advisors expected to manage 15% of HSA investments by 2027.
- Contribution limits projected to rise to $4,200 individual by 2025.
- 50 million HSA accounts anticipated by end of 2027.
- ESG investing in HSAs expected to grow 25% annually through 2030.
- Mobile app usage for HSAs projected to reach 80% by 2026.
- Total HSA assets forecasted at $200 billion by 2028.
- Employer contribution rates expected to increase 7% annually to 2027.
- Gig economy workers' HSA adoption projected to triple by 2030.
- AI-driven HSA investment tools to capture 20% market share by 2028.
- Medicare-eligible HSA usage for premiums to rise 40% by 2030.
- Crypto investment options in HSAs expected by 2026 from major providers.
- HSA-linked debit card transactions projected to grow 18% yearly.
- Female-led HSA growth forecasted at 9% annually through 2030.
- Regulatory changes may allow HSA use for LTC insurance by 2025.
- 60% of HSAs expected to be invested by 2030.
- Small employer HSA mandates proposed, boosting participation 15%.
- HSA balances per capita projected to $6,500 by 2030.
Industry Trends and Projections Interpretation
America’s collective health savings account is morphing from a simple rainy-day fund into a sophisticated, app-driven, investment-hungry financial beast, which means we’re all about to become amateur fund managers whether we like it or not.
Market Size and Growth
- In 2023, the total number of Health Savings Accounts (HSAs) reached 36.2 million, marking a 5.5% increase from 2022.
- HSA assets under management grew to $127.7 billion in 2023, up 14.2% year-over-year.
- The HSA market size was valued at $28.4 billion in 2022 and is projected to grow at a CAGR of 12.5% through 2030.
- Number of high-balance HSAs (over $50,000) increased by 28% to 1.1 million accounts in 2023.
- Total HSA contributions in 2023 amounted to $51.2 billion, a 10.8% rise from the previous year.
- The HSA industry saw 2.1 million new accounts opened in 2023, representing 6.1% growth.
- Global HSA-compatible market projected to reach $45.6 billion by 2028 at 11.3% CAGR.
- U.S. HSA market share held by banks was 42% in 2023, with credit unions at 18%.
- HSA investment assets grew 22.4% to $49.3 billion in 2023.
- Average annual growth rate of HSA assets from 2019-2023 was 15.7%.
- HSA market penetration among eligible HDHP enrollees reached 35% in 2023.
- Total HSA assets per account averaged $3,530 in 2023.
- Employer-sponsored HSAs grew by 4.2% to 24.8 million accounts in 2023.
- HSA industry revenue for custodians topped $1.2 billion in fees in 2023.
- Number of HSA providers increased to 312 in 2023, up 3% from 2022.
- HSA market valued at $32.1 billion in 2024, expected 13% CAGR to 2032.
- Cash holdings in HSAs were 61% of total assets, $77.9 billion in 2023.
- HSA growth rate outpaced traditional savings by 8x from 2018-2023.
- Millennial HSAs grew 12% to 8.4 million accounts in 2023.
- HSA assets doubled from $60 billion in 2019 to $127 billion in 2023.
Market Size and Growth Interpretation
While Americans are clearly embracing Health Savings Accounts with impressive vigor, the fact that 61% of assets are still sitting in cash suggests many are missing the forest for the tax-advantaged trees.
Usage and Withdrawals
- 68% of HSA withdrawals were for qualified medical expenses in 2023.
- Total qualified withdrawals from HSAs totaled $34.8 billion in 2023.
- Average withdrawal amount per HSA was $1,230 in 2023.
- 22% of HSAs had non-qualified withdrawals, incurring 20% penalties.
- Preventive care withdrawals accounted for 41% of total medical spending.
- 75% of account holders used HSAs for deductibles in 2023.
- Prescription drug withdrawals rose 15% to $8.2 billion in 2023.
- Dental and vision expenses made up 18% of qualified withdrawals.
- 12% of HSAs saw no withdrawals despite having balances in 2023.
- Average age at first withdrawal was 42 years in 2023 data.
- Telehealth-related HSA spending increased 28% year-over-year in 2023.
- 83% of withdrawals were reimbursed via debit card in 2023.
- Non-medical withdrawals totaled $4.1 billion, down 5% from 2022.
- Hospital expenses comprised 25% of total HSA disbursements in 2023.
- 61% of family coverage HSAs had withdrawals exceeding $2,000.
- Over-the-counter (OTC) medicine withdrawals surged 35% post-2020 rules.
- 47% of HSA holders saved receipts for future reimbursements.
- Mental health services withdrawals grew 19% to $3.4 billion.
- Withdrawal frequency averaged 4.2 times per year per account.
- 91% of post-65 withdrawals were penalty-free for medical costs.
Usage and Withdrawals Interpretation
The data reveals that while HSA users are mostly a prudent bunch responsibly funding their deductibles and preventive care, a cheeky 22% couldn't resist the forbidden fruit of non-medical withdrawals, paying a 20% tax for their momentary weakness.
Sources & References
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