Not surprisingly use of HSAs and HRAs increases with income (and education)

13 Feb

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WASHINGTON—Are there any differences in health saving account (HSA) and health reimbursement arrangement (HRA) balances as it relates to household income and education?

According to the latest research from the nonpartisan Employee Benefit Research Institute (EBRI), the average balance for HSAs and HRAs increased with both household income and education.

For instance, individuals with less than $50,000 in household income had an average of $1,166 in their HSA and HRA compared with those with incomes of $50,000−$99,999 (an average account balance of $1,303) and those with incomes of $100,000 or more (an average account balance of $1,742).

Account balances also went up with education:

· Individuals with a high school degree or less had an average of $1,219, in their health account.

· Individuals with a college degree had an average $1,519 account balance.

· Individuals with a graduate degree had an average $1,558 account balance.

The data on account balances is based on the 2010 EBRI/MGA Consumer Engagement in Health Care Survey, which also examines numerous other aspects about health care consumers who use these plans, in comparison with traditional health plans. Full results of EBRI’s research are published in EBRI’s January 2011 Issue Brief “Health Savings Accounts and Health Reimbursement Arrangements: Asset, Account Balances, and Rollover 2006–2010,” available online here.

Fast Facts from EBRI is issued by the nonpartisan Employee Benefit Research Institute to highlight benefits information that may be of current interest. Established in 1978, EBRI is an independent nonprofit organization committed exclusively to data dissemination, policy research, and education on economic security and employee benefits. EBRI does not take policy positions and does not lobby.

In my opinion, these findings and the obvious fact that it takes a large amount of money to handle the high deductibles that go with these plans, indicate that the HSA solution may not be the best answer to health care coverage for the general population. 

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2 Responses to “Not surprisingly use of HSAs and HRAs increases with income (and education)”

  1. rdquinn February 13, 2011 at 3:05 PM #

    Good point. Once the use of the funds was structured just like an insurance policy, the value was increased for the people who need the cash at the point of service so to speak.

  2. Larry Becker February 13, 2011 at 9:32 AM #

    Agreed, however with the move from FSAs there has been something lost. I have done hundreds of roundtables with employees over the years. Employers emphasize the tax advantage of the FSA (and now the HSA and HRA). Higher paid employees go right along with that thought process.

    Here is the difference. With the FSA employees can ‘withdraw’ funds equal to their annual commitment on day one. For those make more modest incomes, it isn’t the tax efficiency that they are interested in. It is the interest free loan nature of the account.

    Here they are, unable to truly predict when during the year they will experience medical expenses, They are unable to save for the deductible, copays and the like. The FSA serves as a fund (sort of like a reverse xmas club) upon which to draw.


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